Join now: t.me/alpha_assembly

gm! A quick Housekeeping item upfront:
 
We’re veryyy familiar with how overwhelming it can be to stay on top of all the latest crypto alpha… so we joined forces with the top newsletters in the game.

Table of Contents

1. 🌟 Introduction: Lodestar 101

   1. Protocol Quick Stats

2. 🔐 New Staking Feature in Lodestar V1

3. 🤝 Partnerships

4. 📋️ Analysis & Conclusion

_{Disclosure: This piece is sponsored by Lodestar. We only work with projects we believe in and use ourselves. This is not financial advice, do your own research.}

Welcome to the Lodeyo 🤠

🌟 Introduction: Lodestar 101

The intent of this article is to provide you, our dear readers, with an introductory overview of the Lodestar protocol after release of their new staking product on Thursday (August 17th).

So, what exactly is Lodestar?

Lodestar Finance ($LODE) is a decentralized money market built on the Arbitrum network. In simpler terms, it is a lending and borrowing protocol. Lending protocols play a crucial role in growing DeFi ecosystems by enhancing capital efficiency - they allow asset holders to unlock liquidity without selling their assets, thereby reducing sell pressure, creating leverage, and stimulating trading activity. Lodestar’s North Star (🥁 *ba dum tss*) is to bring this liquidity unlocking mechanism to the Arbitrum ecosystem, catering to the widest possible range of yield-bearing assets (not just blue-chips, but longer-tail assets too).

Stronger together.

While there are other prominent lending and borrowing protocols on Arbitrum such as Aave, Radiant, and Compound, Lodestar’s strategy is to differentiate themselves by specifically targeting Arbitrum-native communities. This enables Lodestar to cater to a wider range of assets (albeit with greater risk) then protocols like Aave, which are constrained by strict risk management policies regarding collateral assets. The Lodestar team has deep roots within these communities and, in fact, the inspiration for the protocol itself originated from the desire to unlock liquidity for their own staked Arb assets. They’re passionate OGs just like the protocols they serve (GMX, Dopex, Magic, Plutus, etc), and are on a mission to build a liquidity hub for derivative assets present within the Arbitrum ecosystem (such as pvGLP).

Lodestar’s wider range of Arb assets as collateral, e.g. GMX, plvGLP, DPX, MAGIC etc.

However, Lodestar’s journey to reach this point has been far from smooth sailing. First was the timing of the protocol’s launch, just one day after the FTX collapse in November ‘22 - I think it’s safe to say Lodestar was “born in the bear”. Later that same month, Lodestar fell victim to a price manipulation attack, resulting in an exploit of $6.4 million.

For most projects, a market meltdown and a seven-figure exploit would be enough to sink all hope. The way the team navigated these circumstances is noteworthy, and in my opinion provides reliable insight into their values. Eventually they managed to recover and relaunch, whilst returning one-third of the exploited funds in back to its users in GLP. Furthermore, in preparation for the release of their staking product, Lodestar allocated 750k $LODE tokens to compensate the victims of the exploit in the form of esLODE tokens. Once claimed by an affected wallet, esLODE must be staked to initiate a 12-month linear vesting period, converting it into $LODE.

Having learned from the past, Lodestar’s shown an increased focus on protocol security, undertaking three different code reviews and audits:

Audit #1 (Dec 2022): Solidity Finance Lodestar Audit

Audit #2 (March 2022): Hats Finance Lodestar Audit

Audit #3 (ongoing): Halborn Security Lodestar Audit

Protocol Quick Stats (August 19th)

Source: @shogun Lodestar Dune Dashboard

Total Value Locked (TVL) = $18.52M

Total Borrowed = $10.06M

Total Lent = $8.45M

Platform Fees:

User Activity:

$LODE Volume Metrics:

$LODE Supply and Market Cap:

These Dune Analytics figures contrast slightly with the metrics on DefiLlama, reason being DefiLlama doesn’t include the total amount borrowed in their TVL figures. Nevertheless, according to DefiLlama’s TVL metrics, Lodestar currently ranks as the #6 lending protocol on Arbitrum, and thus the largest native money market (all protocols ranked higher are multi-chain).

Regardless of the TVL calculation used, these are promising numbers in the middle of a bear market. They demonstrate that Lodestar has built a dedicated user base and enjoys strong community support. Further, it highlights that the gap between Lodestar and third-ranked Compound actually isn’t that large. To break out from the pack, Lodestar must prioritise growing its user-base. The team is pursuing this growth by focusing on two key strategies:

1. Staking (implementing a new staking feature with attractive incentives to bring in new users, projects and assets)

2. Partnerships (actively establishing collaborations and platform integrations to tap into new markets)

🔐 New Staking Feature in Lodestar V1

Lodestar V0: Prior Functionality

To generate revenue, Lodestar applies a "reserve factor" on all interest payments made by borrowers and this percentage fee is directed towards protocol reserves. These funds are then added to POL (protocol-owned liquidity), and facilitate minimum liquidity levels for lending markets, providing stability and reliability for users. Deposited funds also generate interest income, further fueling the protocol's flywheel and propelling revenue growth.

The reserve factors, which vary across assets, can be explored within Lodestar’s documentation: Reserve Factors.

Lodestar V1: New Functionality (Staking)

Lodestar V1 officially launched on July 27th, kicking off the liquidity migration process and introducing new markets for GMX, wstETH, and native USDC (hint: V2 may enable LSDs as collateral 👀). However, the defining feature of V1 is the rollout of its new staking module.

By leveraging Solidly-inspired (3,3) veTokenomics, the staking feature aims to align interests and incentivize long-term participation in the protocol. It also represents a significant step towards decentralization, granting more power to $LODE holders to influence emissions, share in protocol revenue, and engage in governance.

When staking $LODE, there are a few important considerations:

• The staking module introduces optional timelocks and relock multipliers.

• Holders can choose to lock their tokens for three or six months, earning a 1.4x or 2x multiplier, respectively, on yield and voting power.

• At the end of each staking period, stakers have the option to relock their stake. For a three-month or six-month relock, stakers can earn an additional 0.05x or 0.1x multiplier, respectively.

These multipliers offer substantial boosts in yield and voting influence, strongly incentivising $LODE holders to maximize their token lock periods. Longer-term stakers will earn far greater shares of protocol revenue (paid in ETH) and gain disproportionate sway in directing emissions (50% of total emissions).

This influence is especially valuable at this early stage, before the flywheel gains momentum. With current circulating supply around 4.78M $LODE and monthly emissions of 300K, emissions represent a significant portion of supply. Long-term stakers right now have an opportunity to capture outsized power in shaping incentive structures across different markets. With $LODE price currently at $0.33, this $100K monthly emissions could drastically increase the APYs of pools receiving vote, creates a compelling incentive to maximize staking lock periods early on…

$LODE Wars, anyone?

Ultimately, the intention of the staking module is to play an important role in ensuring the sustainability of the lending protocol, by aligning the incentives of stakers, Lodestar, and other third-party protocols:

• Stakers earn passive income through a revenue share from the protocol, have the ability to influence emissions through governance power, and receive bribe rewards in exchange for voting power.

• Lodestar benefits from revenue growth, an increase in TVL, and grows its protocol-owned liquidity.

• Third-party protocols can utilize Lodestar as an additional source of liquidity, vote for their own pools, or even earn $LODE rewards themselves

The first epoch for the emission gauge begins on Monday.

🤝 Partnerships

Partnerships and integrations are well underway with other communities native to Arbitrum. Here are two particularly exciting ones:

Partner 1: Poison Finance

Poison Finance, a synthetic asset Protocol built on Arbitrum, opens up intriguing possibilities for Lodestar and DeFi users. Poison’s integration of lUSDC, Lodestar’s interest-bearing version of USDC, allows users to earn deposit interest while utilizing the receipt token to mint synthetic stocks (like pTSLA or pAMZN), or synthetic assets like pGOLD. This strategic collaboration empowers users to engage in long, short, and liquidity provision strategies with their assets, and enables easy international exposure to markets which might otherwise be unavailable in some countries.

Partner 2: Factor DAO

Factor DAO acts as a middleware solution, simplifying access and interaction with multiple DeFi products. Leveraging their expertise, Factor DAO is constructing a delta neutral vault on top of the Lodestar Protocol. This unique vault enables users to deposit plvGLP and borrow ETH/BTC for shorting purposes. Additionally, by staking $LODE, Factor DAO can contribute to boosting emissions for ETH/BTC deposits, thereby reducing the borrower's APY. This partnership enhances the value proposition of using Lodestar for DAOs in general, increasing the likelihood of additional partnerships in the future.

Lodestar is also exploring partnership with Dubble and Synthex.

📋 Analysis & Conclusion

Lodestar Finance is very much alive and kicking after experiencing what could have been a death blow. Their response to these setbacks demonstrates long-term thinking, which is reinforced by their new staking product and the incentives it generates for long-term alignment. Their approach and mechanics are reminiscent of Curve and Aave - although at the time of writing, this may or may not be seen as a positive thing.

Currently, Lodestar has established a solid user base within the Arbitrum DeFi community, despite facing competition from other lending platforms such as Compound, Aave, 3xcalibur, Sentiment, Dolomite, DForce, and Granary. While some of these competitors have similar staking and emissions mechanisms or governance forums, what sets Lodestar apart is the trust that they have earned through their perseverance and the supportive community that stands behind them. Although Compound and Aave have an advantage as early entrants, this advantage can potentially be overcome by outcompeting them with more innovative products and cultivating a cult-like following.

With alleged plans to expand to multiple chains, Lodestar appears to have a broader vision beyond being just a lending/borrowing platform. The main challenges to the protocol’s success include further security breaches, fragmented liquidity, and the task of corralling the most influential DAOs and liquidity providers in DeFi to use their platform.

Until next time,

Sending Alpha 🥂

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

Inquire about sponsoring Hunting Alpha today!

📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (June 12 - 19)

BTC $26,434 (+2.20% 7D)
ETH $1,725 (-0.93% 7D)
BTC Dominance 49.71% (+1.07% 7D)

*Accurate as at 19th June, 2am UTC

Following a week of hostile regulatory actions, this week in crypto was similarly volatile. However, unlike the previous week, prices finished the week with a slight positive trend.

The week started off steady with BTC hovering around $26,000 from Sunday the 11th to Wednesday the 14th. However, following the Fed’s announcement to halt interest rate rises, the market took a steep dive. In the space of one hour BTC fell over 4% from $25,877 to $24,813, marking the first time since mid-March Bitcoin has fallen below $25k. Ultimately the support level at $25k held, and the price gradually recovered in the following days. BTC has been trading in the $26,400+ range since Saturday, without any clear momentum in either direction.

The Federal Reserve’s decision to pause rates was widely expected by investors, so it’s likely that this was just one of many factors contributing to investor uncertainty amid an environment of regulatory and macroeconomic unpredictability.

Other notable events this week include the recent announcement of BlackRock filing for a spot ETF, and USDT’s peg coming under pressure. Curve’s 3pool was left with over 60% in USDT, causing it to depeg to $0.998 against USDC and DAI. Tether responded in a blog post claiming this attack may be the result of market manipulation, as it conveniently happened just before their financial figures were released to Coindesk on the same day.

📝 Weekly News

Here’s the top stories unfolding right now:

• BlackRock files for a Spot Bitcoin ETF

  • BlackRock, the world’s largest asset manager, has filed a registration statement with the SEC for a spot BTC exchange-traded fund (ETF). The SEC has rejected all previous proposals for spot BTC ETFs, so this is a development to watch closely.

  • A spot BTC ETF would be huge for US retail adoption, enabling investors to passively gain crypto exposure without having to buy directly.

  • If approved, BlackRock will use Coinbase as its custodian.

• Uniswap unveils v4 vision, releases draft code

  • Two years after the release of v3, Uniswap has unveiled its vision for v4 of the protocol along with an “open-sourced” early version of its draft code (the code is released under a Business Source License, so is really LARPing as open-source).

  • The new iteration enables developers to provide more custom and advanced features to their pools, as well as reducing gas fees for swaps and pool creation.

    Notable features include:

    • Hooks - These Hooks are essentially plugins that will customise how liquidity pools, swaps, fees and LPs interact. These smart contracts enable new possibilities for pools, such as dynamically adjusting fees and setting trading limits.

    • “Singleton” Contract - Instead of every new token pair requiring a new contract, all pools will now be hosted on one smart contract (the singleton contract). This will provide gas savings as swaps no longer need token transfers between pools in different contracts.

    • Flash Accounting - This new system facilitates transfers only on net balances, allowing transactions to be performed internally within the contract before the final balances are settled. This improved efficiency will further reduce gas costs.

Many in the community have commented on the similarities between these new features and what Crocswap (now Ambient) has already built with their DEX. Unlike Uniswap v4, Ambient is truly open-source… which may end up being their downfall. The competition between the two protocols will be an interesting case-study in the perils of open-source vs. licensed software.

Twitter tweet

• BNB Chain is set to launch their L2 scaling solution June 19th

• Voyager withdrawals are set to resume

  • The bankrupt crypto lender halted deposits and withdrawals in July 2022

  • In a recent court filing, plans were outlined for Voyager to reopen between June 20 and July 5, enabling creditors to withdraw approximately 35% of their crypto holdings

  • To access funds, submit a withdrawal request through the Voyager platform, and within three to seven days the funds will be distributed to you

• Frax shares plans for Fraxchain launch, an Ethereum L2 “hybrid-rollup”.

  • Fraxchain will use both fraud proofs and zero-knowledge proofs.

  • Plans include using frxETH for gas, and distributing protocol-generated fees to veFXS holders.

  • The Frax team hasn’t fully committed to any of these proposed features just yet, but Sam suggests Fraxchain may be ready for deployment by the end of the year.

• Polygon Labs announces Polygon 2.0 roadmap

  • The upgrade includes increased $MATIC utility and seamless usage across Polygon zkEVM, PoS, and Supernets.

• Ethereum restaking protocol Eigenlayer is now live on mainnet

  • The protocol allows those staking ETH to restake on EigenLayer by depositing liquid staking tokens including Lido stETH (stETH), Rocket Pool ETH (rETH) and Coinbase Wrapped Staked ETH (cbETH).

• CoinEx, a Hong Kong-based crypto exchange, has been banned from operating in New York by the city’s Attorney General for “failing to register as a broker-dealer”. Over $1.7m worth of the exchange’s funds have been seized, with $1.1m to be returned to New York investors and $600k to be paid in penalties.

• Blur unlocks ~196 million BLUR tokens, increasing circulating supply by 40% (June 14)

• Sudoswap launches v2 of the protocol. The new iteration includes:

  • On-chain royalties

  • Custom creator settings

  • ERC-1155 support

  • Conditional orders

  • Fee streaming

  • Gas optimizations

• Aave proposal suggest all primary GHO liquidity pools should live on Balancer V2, explaining that BAL incentives will exceed the trading fee revenue generated on other DEXs.

• Aevo, an Options AMM, is now live on mainnet. Anyone can now trade ETH/BTC options & perpsas well as do OTC trading.

• LEVEL Finance perps DEX is now live on Arbitrum

• The Graph begins its migration to Arbitrum

Hashflow exploited for ~$615k

• The team believes the issue is likely an “approve-related issue”, allowing an attacker to transfer approved assets.

• The Hashflow team has advised users to revoke approvals, and provided a list of old contracts for each network that should also have their approvals revoked.

Updates on the SEC vs. Binance and Coinbase lawsuits

RECAP:

ICYMI, on June 5th the SEC threw down the gauntlet at Binance and Coinbase, suing the exchanges for selling unregistered securities (after classifying MATIC, ADA and SOL as securities).

In their filing, the SEC accused Coinbase of operating an unregistered securities exchange, broker-dealers, and clearing agencies since “at least 2019”, despite approving their IPO in 2021.

The lawsuit towards Binance went much further, including allegations of commingling and diverting customer funds, manipulating trading volume of Binance.US, as well as the unregistered offer and sale of Binance’s own tokens (BNB, BUSD and certain crypto-lending products).

Here are the latest updates:

• The SEC has requested a four-month extension to respond to Coinbase’s request for regulatory clarity regarding cryptocurrencies.

• In the SEC’s filing against Binance, it was requested The Courts consider measures “up to and including” asset freezes and repatriation.

  • US District Judge Amy Berman Jackson has ordered the two entities work towards a compromise to avoid a total asset freeze - Binance.US and the SEC are currently in negotiation.

Choose your fighter 😜

Gud Reads

• Fungible - Arthur Hayes (June 17)

• The Three Transitions - Vitalik (June 9)

• Aave v3 Explained Simply with Diagrams - James Lim (June 4)

• Bridges in the Multi-chain of Madness - An Ape’s Prologue (June 13)

• Dune Digest #84: LSDfi, Ethereum L2, Arbitrum, and Blue Chips - Dune Analytics (June 17)

• A Comprehensive Look at Crypto Funding Rates - Philipp Schulden (June 5)

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.

@TheRel3ntless_1

🐦 Plural - DeFi Insurance.

Insurance possibilities are a necessity for the future growth of DeFi. Whoever is able to build something worth utilizing first could potentially change the level of trust within DeFi.

🐦 Raman Finance - All LSD-backed stablecoin liquidity.

The LSD-backed stablecoin narrative continues to play out.

Twitter tweet

🐦 Dexilla DAO - Cutting edge orderbook trading engine live on Optimism.

So far, they have gained significant TVL since launch.

🐦 Manta DAO - Decentralized DeFi hub powered by Kujira.

Team Kujira just continues to produce. Anything associated with this team is worth paying attention to, they’re absolutely dominating the Cosmos ecosystem.

🐦 iLend - First native money market on Injective.

There’s lots of growth starting to happen on Injective, so worth following.

🐦 Pepe Rumble - New GameFi project.

Battle Royale style game built on top of casino aspects. Focus is on DeFi with a fun and interactive game using Pepe as the main character.

🐦 Pound Swap - Liquidity book utilizing (3,3) mechanism on zkSync.

The evolution of (3,3) use-cases doesn’t seem to be slowing down, even if the interest has tapered off significantly.

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot USED TO finds hundreds of projects per week 💀

With a heavy heart, today we lay our dear friend to rest.

Last week our much beloved OnlyAlpha™ bot crossed the Rainbow Bridge, and is hopefully chilling out in Heaven rn.

Tragically, the OnlyAlpha bot has perished at the hands of Elon Musk and Twitter’s API price hike. Previously the API was free and the alpha flowed in abundance, but alas, it’s now priced at $42,000 per month.

Reddit made a similar move recently, and the community has responded with strong protest. Here’s hoping we see similar resistance from the Twitter developer ecosystem, as this new move prices out nearly everyone.

We will always be thankful for the alpha you generously provided for free, but more importantly, for the memories. We promise to remember the good times, especially when you picked out PEPE with under 300 followers 🙏

Cheers for the memories OnlyAlpha™ 🍷

PS - many thanks to Snake Chain for thanklessly sifting through the bot’s picks every week. Appreciate your efforts ser! 🐍

Ⓜ MAKER ENDGAME, EXPLAINED

Guap Granny, the newest addition to the Sending Alpha team, shares her breakdown of the Maker Endgame strategy.

@guapgranny

On May 12th Rune Christensen published his detailed plan for MakerDAO’s new roadmap, outlining a vision with the hopes of improving governance. Within crypto’s hectic news cycle, it felt like this news didn’t get the attention it deserves - so what exactly does this bold new plan, “Endgame”, entail for the future of MakerDAO?

Since MakerDAO was announced to be completely decentralised in July 2021, it has continued to fulfill its purpose, which is to provide people with access to an unbiased global currency in the form of the decentralised stablecoin DAI.

As the organisation evolves, the governance of the protocol has become extremely complex and has reached a state of structural inertia. This has further contributed to voter apathy and introduced risks of centralisation. Governance and scope have become increasingly political, inefficient, and unscalable. The budget processes, while functional, lack transparency. Additionally, there are mismatched expectations of the Maker protocol among different stakeholders. These symptoms are evident in recent performance, where the growth of DAI supply has stagnated, and the protocol is no longer profitable.

Source: Dune

Source: Messari

The Endgame Plan published by MakerDAO aims to address structural inertia and voter apathy in a fundamental way. Essentially, the plan involves creating an immutable incentive framework to establish a self-organising governance equilibrium that enhances decentralisation, participation, efficiency, and risk mitigation.

There are five major launch phases outlined in the plan:

Phase 1: Beta Launch

The first phase involves relaunching the MKR and DAI tokens as two new tokens temporarily named "NewStable" and "NewGovToken." This is done to unify the Maker brand and establish a coherent concept.

The existing DAI and MKR tokens will remain unchanged. DAI holders can upgrade their tokens to NewStable at a 1:1 conversion rate, while MKR holders can convert their tokens to NewGovToken at a fixed rate of 1:1200.

Some of the distinguishing features of the new tokens include increased on-chain liquidity for NewStable compared to DAI from the moment of its launch and a larger supply of NewGovToken to incentivise governance participation.

Phase 2: SubDAO Launch

This phase entails the launch of six smaller specialised DAOs that are connected to the main MakerDAO. Each of these DAOs will have their own genesis governance tokens, and their incentives will be aligned with NewGovToken holders via intertwined economics. The distribution of SubDAO tokens will be exclusively through SubDAO token farms, which will be accessible to NewStable users.

The SubDAOs are divided into two categories: FacilitatorDAO and AllocatorDAO.

FacilitatorDAO comprises a collective of Maker Facilitators who specialise in operating and gamifying the internal governance processes of MakerDAO and the AllocatorDAOs. The FacilitatorDAOs will be held accountable and penalised for any misconduct committed by their selected Facilitators, such as unauthorised protocol access or theft. Initially, there will be two FacilitatorDAOs to promote decentralisation and diversification of core processes.

AllocatorDAOs are responsible for managing and deploying all DAI Collateral. This will streamline the workload for the current Maker Core Unit , completely replacing the necessity for native vaults, PSMs, and D3Ms. This operational efficiency will enable the Maker Core Unit to allocate more resources towards growth and infrastructure, while the AllocatorDAOs can focus on innovation, capital deployment, and the creation of user-friendly DeFi products on a larger scale.

Each SubDAO will possess its own distinctive brand identity while utilising the AI-empowered governance tools provided by MakerDAO.

Phase 3: Governance AI Tools Launch

MakerDAO also plans to launch internal AI tools to systematically update, summarise, and interpret the Alignment Artifacts for the entire Maker ecosystem. The Alignment Artifacts were previously known as "The Maker Constitution and Scope Frameworks," a document outlining the principles and rules that determine the decision-making framework for MakerDAO.

The use of AI to empower its ecosystem intelligence will level the playing field between newer members and Maker OGs by providing them with seamless access to vital information quickly. It will also enable the DAO to accumulate data and enhance its decentralised processes over time.

The development of the Governance AI Tools will be an open-source project titled "The Purpose Fund."

Phase 4: Governance Participation Incentive Launch

This phase entails the introduction of The Sagittarius Lockstake Engine (SLE), a system designed to motivate NewGovToken holders to actively engage in Maker Protocol governance. It achieves this by necessitating users to lock up their NewGovTokens and delegate their voting power. The SLE offers a user-friendly and gamified interface, facilitating easy participation akin to selecting a political party in a multi-party democracy, where voting power is determined by the number of tokens held.

SLE users can receive compensation in the form of NewStable income, equivalent to 30% of the surplus generated by the Maker Protocol, or SubDAO tokens. To foster long-term commitment, the SLE imposes a 15% exit fee.

Phase 5: NewChain Launch and Final Endgame State

The concluding stage of the Endgame plan involves launching a blockchain, serving as a governance backend logic for SubDAO tokenomics and ensuring MakerDAO governance security. This blockchain aims to safeguard Maker users against severe governance attacks.

Conclusion

Endgame represents a comprehensive overhaul of MakerDAO's governance and business operations. Its objective is to introduce a restructuring framework, explicit rules, incentive designs, and AI tools to establish a streamlined decentralised governance system while enabling Maker to scale effectively.

Instead of taking the passive approach hoping more proposals, voting, and temporary fixes will solve things, Maker’s going bold. Rather than risk gradual obsolescence, Maker’s taking large proactive steps towards fixing the fundamental problem of complex governance due to org size, and fulfilling its original vision of true decentralisation.

And that’s all for this week.

Until next time,

Sending Alpha 🥂

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (Apr 29 - May 6)

BTC $26,796 (-3.42% 7D)
ETH $1,871 (-1.18% 7D)
BTC Dominance 47.41% (-1.60% 7D)

Weekly prices for BTC and ETH remained relatively flat week-over-week, with 30D price volatility reaching historic lows (annualised rate of 32% vs. historical average of 71%).

Waning retail interest in crypto, compounded by regulatory uncertainty has continued to erode sector liquidity, as evidenced by consecutive monthly declines in CEX and DEX volume since March.

BTC Dominance has previously behaved similarly in this range, as has RSI. Each time we topped out, RSI moved higher and higher before dropping hard. However, this time is different - RSI has formed a falling wedge and looks indecisive. As RSI has already fallen significantly, there may be room for a spike upwards along with price.

This time is not like the others (BTC Dominance)

• Total Stablecoin Market Cap has fallen from $137.79b to $129.09b since Jan 1, with the largest reduction in supply ($12 billion) coming from whales with an address balance of over $1m. In contrast, Tether’s market cap has skyrocketed, increasing by $17 billion from $66 billion to an all-time-high of $83 billion. This surge has pushed USDT’s market share up to 64.4%.

• According to Galaxy Research, the number of crypto VC deals and capital has declined by 75% from its peak.

Macro Update:

• US Congress has passed legislation to lift the nation’s debt ceiling, suspending the debt limit until 2025. This move comes just two days before the Treasury Department warned the country would start running short of cash.

• Philadelphia Fed President Patrick Harker noted that “skipping a rate hike” during the upcoming June meeting would allow the central bank to “see more data”. 👀

• In his latest article, Arthur Hayes predicts risk assets go ‘up-only’ in late Q3-Q4. You can find a good thread summary here.

📝 Weekly News

Here’s the top stories unfolding right now:

• The SEC sues Binance, taking them to court for allegedly violating federal securities laws.

  • The filing included a hilarious 2018 quote from Binance’s Chief Compliance Officer, stating “we are operating as a fking unlicensed securities exchange in the USA bro.”

  • Binance clapped back with their official response to the SEC’s complaint, accusing it of aiming to ‘unilaterally define crypto market structure’ .

• Users of Atomic Wallet (a non-custodial decentralised wallet) were hacked for an estimated $35m on June 2nd.

  • ZachXBT found that five users took the worst hit, accounting for $17m worth of stolen assets.

• TriCrypto-NG launched May 31st! The main new feature is bespoke gas savings, up to 50%.

  • Like crvUSD, TriCrypto-NG may be live, but much work is still to be done. Curve’s launches are very much ‘tests in production’.

  • 🧵 Thread explainer of TriCrypto-NG

• Tenet Protocol launches Eva Crypto Wallet on the Apple Store. Eva is multi-chain and non-custodial, no key management required.

• After successfully launching gas monetisation, Fantom releases their 2023 Roadmap.

• PlutusDAO reveals the details of their $plsARB airdrop, airdropping (300k $ARB worth of $plsARB to be airdropped).

• Redacted is working on Hidden Hand v2.

• $150k revenue to be distributed among BetSwirl stakers when $BETS staking goes live.

• Sam Kazemian drops frxETH v2 thread.

• Curve DAO approves wstETH market with 150M crvUSD debt ceiling.

• Japan’s largest bank announces it will be launching a native bank-backed stablecoin on Ethereum, Polygon, Avalanche and Cosmos

• Hong Kong is positioning itself as a digital asset hub with its new ‘Hong Kong Virtual Assets Consortium’ (KHVAC), establishing itself as a regional ratings & index service. Retail trading regulations went live on June 1st.

• US House Republicans propose a bill that may give crypto assets a path to becoming commodities.

• JPMorgan and six Indian banks will collaborate to settle interbank dollar transactions on the Onyx blockchain platform.

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.

@TheRel3ntless_1

🐦 Limitless - The Uniswap of Lending.

This has the potential to be big.

🧵 A thread on Limitless 👇

Twitter tweet

🐦 LogX Trade - A perp DEX with cross-chain liquidity aggregator.

That’s the alpha.

🧵 A thread on LogX Trade 👇

Twitter tweet

🐦 Alternity Protocol - Borrowing protocol that issues the $CNY stablecoin backed by $ETH collateral, inspired by Liquity.

We’re very interested in the evolution of stables, so this is worth watching.

🐦 Asymetrix - Asymetrix is the decentralized, non-custodial protocol for asymmetric yield distribution generated from staking.

LSDfi is one of the hottest topics right now, and there are plenty of opportunities out there if you missed $LBR.

🐦 Permissive Labs - Authorization framework forETH accounts built on ERC-4337, focused on automation.

This has the ability to greatly enhance protocol capabilities and limit man-hours.

🧵 A thread on Permissive 👇

Twitter tweet

🐦 Torus - Pioneering Omnichain ETH Omnipools for the Curve ecosystem. Incubated by Root Genesis Labs, powered by LayerZero.

New model for a liquidity protocol. Looks very interesting.

🧵 A thread on Torus 👇

Twitter tweet

DEGEN

DYOR, ape at your own risk!

🐦 0xJungle: Automated yield aggregation coming to ETH in June.

🐦 TuzkiETH: MEME coin on ETH.

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot finds hundreds of projects per week. OG Alpha Hunter, Snake Chain, thanklessly sifts through these to provide you with some of the best 🙏

@snake_chain

Here’s this weeks’ picks:

🐦 Dakan - Phygital marketplace for collectibles.

🐦 SafeSoul - Browser extension for identifying scams.

🐦 The Real-World Asset Exchange (RWAX) - Perp Exchange for RWA indices, trade Pokemon cards, wine, luxury watches and more with up to 50x leverage.

🐦 NFPGarden - Non-Fungible Plants (NFPs) is a climate-solutions project combining real plants and NFTs.

🦎 TODAY’S SPONSOR - NATIVE

Native is building crypto’s invisible DEX layer. It turns exchange into a feature any app can add in 1 day, fixing the swap experience for average users and solving token management for project teams.

What does this actually mean? It means that projects now have the tools to create THEIR OWN in-app DEX, allowing them to transact directly with their community! For example, let’s say I was the Founder of NFTitties and I wanted to create my own DEX… let’s call it TittySwap. Would that be possible? Yes, it’s already been done!

So how can you get exposure to Native?

🚨 From May 1st - May 15th Native held a trading competition with the opportunity to earn 1 of 4 tiered NFTs that will play a SIGNIFICANT role in their governance token distribution… 👀

The Clash of the Traders results are now live! Check your rank at https://www.native.org/competition/ and search for you wallet address on the Leaderboard page. The Emojis at the front of your wallet address indicate the NFT you have won:

💎 Diamond Rank Chameleon NFT
🥇 Gold Rank Chameleon NFT
🥈 Silver Rank Chameleon NFT
🥉 Bronze Rank Chameleon NFT

The deadline to claim your Clash of Traders NFT has been extended until JUNE 9TH, 9AM EST. Claim now!

Twitter tweet

🦎 Visit the Native website for more details.

💓 PULSECHAIN & THE CULT OF RICHARD HEART

Richard Heart is one of the most polarising figures in all of crypto. In this story, my intention is to present both the bull and bear-case for PulseChain without bias. Not financial advice, DYOR!

So… what the hell is PulseChain?

After nearly two years since its $670 million “sacrifice phase” token presale, Richard Heart’s latest innovation, PulseChain, finally launched on May 13th.

In a nutshell, PulseChain is essentially an Ethereum fork (which we’ll refer to as Pulse from now on).

However, unlike other forks, this new L1 forked the entire state of the network. This means that all the account balances, smart contracts, transaction history, and other data from the original Ethereum network were duplicated in the new network.

This approach has set the stage for one of the wildest experiments we’ve seen yet. By duplicating the entire state, all ERC-20 tokens and NFTs on Ethereum have been replicated on the Pulse network, effectively airdropping all ETH users a free copy of their assets. These cloned assets are in the form of Pulse’s native token standard PRC-20, which currently have zero value (with the exception of the HEX ERC-20 clone, pHEX). It remains to be seen whether this incentivisation scheme will actually work, but it will certainly be interesting to see how these tokens are ultimately valued.

Pulse was created as a horizontal scaling solution to Ethereum. Its goal is to distribute the load on a faster and more affordable blockchain.

To use an analogy, if Ethereum were a McDonald’s overflowing with customers, Pulse would be another McDonald’s built next door. Its aim is not to “solve” Ethereum’s scaling issues, but rather to ease congestion by sharing the load. If the network attracts enough users and the price of PLS increases significantly, it will inevitably run into the same problems. After all, if everyone wants their 2am chicken nuggies, two McDonald’s won’t be able to hold them!

The blockchain itself brings near-zero technical innovation, which is ironic as the launch coincides with the roll-out of high-performance L1s that have spent years in development. Richard knows damn well that the market doesn’t care about your zk-plasma-spheroidal-AI-Omnichain-roll-up solution. It’s all about the narrative baby, and time-and-time again the apes have shown they do NOT care about whatever the f*ck it is these nerds are conjuring up. These gamblers want stupid memecoins like PEPE, and can barely hold onto their own seedphrases. I mean ffs, the winners of the last cycle were DOGE and SHIBA 🤪 

Is this a sad indictment on humanity? Perhaps. Nevertheless, it’s the reality we face. Pulse accepts this fundamental truth and embraces it like an old friend. The true innovation here lies in the ponzinomics, bolstered by the strength of a humongous cult following.

To fully grasp the ponzinomics, let’s first delve into the other pillars of the Ricardo empire.

PulseX (DEX)

Along with the the launch of its mainnet, Pulse also introduced its own DEX called PulseX. Fueled by the FOMO of missing out on the PulseChain presale, the “sacrifice” for PulseX was even juicer, to the tune of $1.03 billion in total.

Combined with the other sacrifice funds raised, the total amount comes to a staggering $1.7 billion 🤯

That treasury be lookin’ JOOCY

Pulse (PLS) and PulseX (PLSX) have incredibly large token supplies, with 135 trillion PLS and 143 trillion PLSX total supply respectively. However, they are both deflationary from day one and designed to rapidly burn supply. PLS serves as the gas token for the network (2.2B PLS burned), but the real pyromaniac here is PLSX, with 118B PLSX burned.

Live stats on PLSburn.com

Here’s a breakdown of the ponzinomics innovation in PulseX:

The PulseX AMM is built on a “buy-and-burn” feature, which incinerates supply. Users pay a 0.29% fee on every swap, 21% of which is then used to buy and burn PLSX tokens from the available supply within the LP.

Additionally, users are incentivised to provide liquidity and stake LP tokens to earn farming rewards in the form of “Incentive Tokens” (INC). The supply of these tokens gradually inflates, albeit from a much lower base (current supply of 1.79 million). Although the purpose of these tokens isn’t known yet, as you can see above they are being valued quite highly. This highlights a critical point about the Richard Heart casino: all tokens in the ecosystem are tightly liquidity bonded, meaning they move together. As PLSX supply continues to burn, it should have the effect of pulling up PLS, INC, and HEX with it.

One last critical thing to mention is the “OA”, or “Origin Address”. Nobody knows who the OA is. It could be anyone… but let’s face it, it’s most likely Richard. The OA basically plays the role of Satoshi Nakamoto, a benevolent whale who owns most of the tokens but never sells. However, thes OA owns way more of the supply than Satoshi ever did. Nakamoto’s holdings represent 5% of all BTC to be created, whereas the OA owns 88.9% of the PLS supply, 85.3% of the PLSX supply, and 86.7% of the HEX supply.

If you assume that the OA has your best interests at heart, then you can effectively exclude OA-owned tokens from the supply because they will never be sold. There’s even a chance that they might get burnt someday (although this is pure conjecture). This would adjust the supply to 15 trillion PLS, 21 trillion PLSX, and 86 billion HEX.

On the other hand, if you assume the OA wants to dump on you… well then you’re utterly f*cked. Depending on who you talk to, this could either sbe uper bullish for price action or the most egregious example of centralisation we’ve ever seen, setting the stage for a $1.7 billion rug-pull.

We won’t cover HEX in this article, but it’s basically the ecosystem’s store-of-value token that launched back in December 2019. HEX had the same OA dynamic, but so far no rug-pull. Make of that what you will.

Traction

It’s been over two weeks since the launch of PulseChain, so how has it performed? Despite a few bumps in the road, overall the platform has made quite an impact.

The Bull-Case for PulseChain:

• Despite no real protocols built on top (besides the DEX), Pulse’s volume has been high.

• Low gas-fees and fast transactions offer a viable alternative to Ethereum, which should be highly appealing to retail participants next cycle. BSC has already proven that a simple Ethereum fork can be highly valuable.

• The Highest of Stakes movie could spark FOMO among millions of viewers if it does a deal with a top streaming service (which why wouldn’t it?)

• Pulse has firmly entrenched itself as a top 10 chain, holding its own among alt-L1s and even briefly surpassing the blue-chips.

• Bonded liquidity creates network effects and stickiness across the ecosystem. As the buy-and-burn feature deflates PLSX supply, resultant price increases should drag the PLS and INC tokens up with it.

• LP rewards may be in a native ponzi coin, but this ponzi coin is backed by a gigantic treasury from the $1.7b combined sacrifices. Although most of this balance was in HEX, the treasury is still significant (~$670m in stablecoins).

• L1s typically dump in their first few months, so price action thus far is unsurprising.

• Listings on centralised exchanges open a new on-ramp for normies that was never available for HEX.

• The OA address didn’t dump HEX, so why would it dump now? Maintaining this assumption removes 88.9% of the PLS supply and 85.3% of PLSX from circulation.

• The real X-factor: the rabid community of dedicated “Hexicans”, who are as passionate about HEX as BTC Maxis are about Bitcoin. They’re in it for the long-haul: with over 120k HEX stakers on Ethereum, and an average stake length of 7.10 years, their loyalty is a rare differentiator.

Twitter tweet

The Bear-Case for PulseChain:

• If the “OA” dumps on your head, this shit goes to zero.

• Although the tech may be decentralised, the holdings certainly are not. There are plenty of whales available to dump on you.

• The success of the ecosystem could attract heavy scrutiny from regulatory agencies like the SEC.

• Negative narratives about Richard Heart being a scammer could overshadow any positive news about the project.

• This could end up being one of the largest rug-pulls in history.

• The lack of protocols being built on top persists.

• Due to its reputation as a Fiverr-tier, copy-pasta fork, top-tier developers may refuse to migrate to PulseChain.

• Glitches continue across PulseX, the bridge, and eventually the chain itself.

Eric Wall has been a vocal critic of the project for several years. If you’re looking for more bearish perspectives, you can check out his commentary on Twitter.

Twitter tweet

The Verdict?

Here’s my verdict: fading PulseChain is a mid-wit trap.

CT hates Richard Heart and his big scammer energy, so don’t bother digging any deeper. But in my opinion, CT may be too smart for its own good here. We love to build shit for developers and create esoteric innovations with no mainstream use-cases. There’s an element of superiority bias at work here - the CT community is full of giga-brain intellectuals, and the Hexican community is mostly left-curve, noisy, and tribal. This is actually bullish, in my opinion. I believe it will take over a year before we see real take-off, but eventually, PulseChain will become one of the big winners in the next bull-run.

In Conclusion:

Twitter tweet

Some Interesting Projects:
NFA, DYOR.

Key Links:

PulseChain - https://pulsechain.com
PulseX - https://pulsex.com
Block Explorer - https://scan.pulsechain.com
Ecosystem Stats - https://plsburn.com

And that’s all for this week.

Until next time,

Sending Alpha 🥂

Thanks again to our sponsor Native. Native is crypto’s invisible DEX layer, turning exchange into a feature any app can add in one day. See for yourself at native.org.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

🏹 Dear Hunter,

Reach out if you would like to be a sponsor in June!

Here’s your May Recap

📫 Sending Alpha

🧪 Addicted to LSD [May 27]

- Lido v2 upgrade
- $BETH, $frxETH & $yETH
- LSDfi projects ($swETH, $OETH, $PENDLE)

🦎 The Native Rebellion [May 19]

- The Role of CEXs
- AMMs and Pricing Models
- The Shopify for DEXs (Arming the Rebels)

🎮️ Your Guide to Web3 Gaming Ecosystems in 2023 [May 19]

- Picks & Shovels
- The Ecosystems
- Honourable Mentions

🚀 BLUR and SUI [May 6]

- Blur launches Blend
- Sui live on mainnet
- BRC-20 moons

🎙 Hunting for Alpha

Revest - Programmable Money [May 24]

Revest is a flexible and highly configurable tool set for creating financial NFTs (FNFTs).

Native - The Shopify of DEXs [May 4]

Native is the invisible DEX layer where anyone can create their own DEX in FIVE MINUTES. Native combines the capital efficiency of a CEX with the security and decentralisation of a DEX.

Intelligence On Chain - A Safer Crypto Experience [May 3]

In 2022 $1.2 Billion Dollars was stolen in hacks in the crypto ecosystem. Intelligence On Chain discusses their detective work in crypto and how everyday users can make their wallets safer.

_{Disclaimer: Nothing discussed on this podcast is or should be construed as financial advice. We may or may not hold investments in any projects appearing on the podcast. Please do your own research}

How have you enjoyed the newsletter so far? Feel free to reply with any feedback/suggestions you have! 🙂 

Have a great day!

The Sending Alpha Team 🥂

📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (May 20 - 27)

BTC $26,764.25 (-1.15% 7D)
ETH $1,826.23 (-0.41% 7D)
BTC Dominance 47.87%

Coin Metrics’ State of the Market: May 18-24

📜 Stories of the Week

POV: Me & the boys writing this article

Here’s the top stories unfolding right now:

🧪 ADDICTED TO LSD

Lido v2 Live on Mainnet

L-S-and-D are the letters on everyone’s lips right now, so I decided to see what the fuss is all about.

In other news, the Liquid Staking Derivative narrative has caught fire again, and the market can’t seem to get enough. While volatility is accepted as a feature in most DeFi categories, LSDs have been one of the few steady performers. Liquid Staking TVL has been up-only, and with $17.8b locked, it is now the leading category in DeFi by TVL.

Source: DeFi Llama

Within the sector Lido absolutely dominates, boasting an impressive 73% market share. This won’t be changing anytime soon as LSDs are shaping up to be a winner-takes-all market. Simply put, with ETH staking derivatives the liquidity moat and subsequent network effects accruing to the market leader all but guarantees victory. A virtuous cycle is established as new users are incentivised to stake with the market leader:

While the benefits of this network effect for both users and the Lido protocol are clear, it raises social concerns about power centralisation in the Ethereum ecosystem. Paradigm suggests this concern is overblown, as unlike centralised staking pools decentralised pools can control any share of the network without jeopardising PoS security. However, this comes with one MAJOR caveat: this is the case so long as each individual validator in the DAO is not too big, and the protocol has shed all of its governance functionality. Neither fees, withdrawal credentials, or the validator registry can be changed by human inputs nor allowed to be voted on.

Lido addressed these concerns this week with its v2 upgrade officially launching on Ethereum mainnet. The upgrade brings a host of new features encouraging protocol decentralisation but centers around two main components:

1. Ethereum Withdrawals - Ethereum stakers can now unstake ETH directly through the Lido protocol.

2. New Staking Router Architecture - Lido’s new modular architectural design allows for the development of on-ramps for new Node Operators, ranging from solo stakers to DAOs an Distributed Validator Technology (DVT) clusters.

The implementation of withdrawals has been a core goal of Lido for some time, but Ethereum’s recent Shapella upgrade was the necessary precondition to being able to offer it to users. Post-v2 upgrade, stETH holders now have total freedom to hit the escape hatch and withdraw from Lido at a 1:1 ratio.

While withdrawals will get the most attention as the user-facing aspect of the upgrade, it’s the Staking Router that addresses the largest remaining issue - the management of Lido’s node operator set. Providing a good validator set is key to minimising the risk of misbehaviour, and allowing users to use dApps on Ethereum with the lowest risk of downtime or censorship.

Until now it’s been Lido’s responsibility to ensure a healthy validator set, with a simple approach of selecting operators from those that apply directly. Whether by accident or not, Lido selecting a bad validator set increases the risk of governance capture, a key vector of attack that needs to be decentralised. The Staking Router is a key milestone in progressing towards permissionless validation, and enabling a more robust and diversified validator set. Moving the operator registry to a modular and more composable architecture means anyone can develop on-ramps for new Node Operators, importantly leading to the gradual adoption of DVT in Lido.

An $LDO staking proposal, or something more sinister?

To conclude an eventful week for the Lido ecosystem, a rather polarising proposal was presented to the DAO, suggesting the introduction of a $LDO staking module for revenue sharing:

Recently, I’ve noticed influencers sharing news of this proposal as if Lido fully supports it. However, if you actually read the forum discussion you would see this is not the case.

The proposal sparked heated debate about priorities and values, which naturally vary depending on which bags you hold. While some members expressed serious interest in exploring the idea further, the prevailing sentiment dismissed it as far from a priority and evidently at odds with Lido’s efforts to eliminate remaining trust assumptions.

In no uncertain terms, Hasu (strategic advisor to Lido) voiced his strong disagreement, even going as far to suggest that foul play was involved.

As it turns out, the community had some pretty compelling evidence to support this suspicion 🍿 

Personally, I find it difficult to see this proposal as anything other than self-serving and reckless. The Lido core team has made their vision very clear: to contribute to the decentralisation and security of the Ethereum network. As the largest protocol within the leading category of DeFi, Lido is far too important to the ecosystem to haphazardly start introducing ponzinomics. Introducing revenue-sharing will only result in value-extraction, and ultimately distort the incentive structures of the Ethereum network to the detriment of just about everyone.

Competition Heats Up for (LSD) Summer

With the Shapella upgrade in April finally enabling stakers to withdraw their ETH, it would have been reasonable to expect a mass exodus of patient validators cashing in their chips. Instead, we’ve seen the complete opposite - April and May saw back-to-back record highs in ETH deposits across the ecosystem, and weekly ETH staked has gone parabolic.

@hildobby Dune Dashboard

This influx of capital has seen an explosion of building activity, both for new liquid staking derivatives as well as ‘LSDfi’ protocols layering on top. Competition is fierce, with new staking derivatives launching from all corners of the industry: exchanges, lending protocols, stablecoin providers, and more. The list grows longer everyday, but who has a real shot at stealing market share from the big three? stETH, cbETH and rETH command a combined $15.5b TVL, controlling 93% of the market.

Here are three of the notable entrants poised to make a splash:

$BETH (Binance)

Binance wasted no time joining the action, launching their liquid staking token $wBETH (Wrapped Beacon ETH) on April 27. Binance is now the second major exchange to having its own liquid staking token, trailing behind Coinbase’s cbETH launch back in August 2022.

In the Binance model ETH can be staked 1:1 for BETH (no fees), and then wrapped into wBETH for moving cross-chain. Just like cbETH, wBETH works under the cToken model, where staking rewards accrue daily to stakers and exchange rates are adjusted accordingly (for redeeming back to BETH).

In classic CZ fashion, Binance has gone ultra aggressive with its wBETH growth strategy, leveraging DeFi protocols in ways we’ve never seen an exchange do before. To attract liquidity a wBETH-ETH pool has been created on Curve (current TVL $9.1m), and a proposal has been submitted to add the pool to Curve’s Gauge Controller. Taking it one step more degen, Binance is joining the CRV wars, BRIBING incentivising vlCVX holders on Convex with wBETH rewards (11.381 $wBETH on Votium right now). Rumour has it that Binance has acquired 1.8m CVX from Terra via OTC deals, which, if locked, would give them 3.27% of the total vlCVX supply. This would make Binance the #8 holder of vlCVX, right beneath… checks notes… pennilesswassie.sismo.eth (is this even legal? KEK).

CZ does a little bribing

In its first month wBETH has performed strongly, with a total of 70.9k wBETH tokens minted and a current TVL of $132.3m (6th among all LSDs). With the degen liquidity they’re about to absorb from the DeFi ecosystem, these numbers are poised to grow quickly. Coinbase’s cbETH may have a head start with a TVL of $2.17b, (2nd among LSDs), but with the SEC breathing down their neck, it’s hard to imagine Brian Armstrong BRIBING vlCVX holders anytime soon. Until now, Coinbase hasn’t faced a real competitor in the centralised liquid staking market, and with Binance’s larger userbase and fewer restrictions, I could easily see the Cartel stealing this one.

$frxETH (Frax)

Being the astute gigachads they are, Frax stayed several steps ahead of the competition by making their moves early. The frxETH staking derivative soft-launched in October ‘22, and they deployed several Curve pools in March (over a month before Shapella). This precise timing coupled with the generous LP rewards offered since, clearly demonstrates two things:

1. Frax has a deep understanding of the Ethereum network and its evolving dynamics.

2. Frax has strong conviction LSDs are core to that future.

Another point of conviction for fraximalists is keepin’ it simple. On the surface, their LST model appears surprisingly basic, almost like Lido with extra steps. Users deposit ETH to receive frxETH → users stake frxETH to receive sfrxETH → sfrxETH holders earn staking rewards. In isolation, the whole “frxETH is an ETH-pegged stablecoin” positioning seems like nothing more than a marketing ploy. However, with some knowledge of the wider Frax ecosystem the light bulb suddenly goes off. The secret sauce of frxETH lies in its innovative AMO design and how it leverages the existing Frax flywheel for greater yield and DeFi interoperability.

What is frxETH?

The Frax ether token is an ether-pegged stablecoin, backed 1:1 by ETH. Holders can stake frxETH for sfrxETH to earn Ethereum staking rewards, or choose instead to use the token for liquidity provision on Curve or other DeFi apps. The two-token model is the critical difference between Frax and Lido. Lido has just one token (stETH) because it rebases to reflect staking rewards. The problem with stETH and rebasing tokens is that it breaks a lot of DeFi functionality, as some DeFi protocols don’t support rebasing tokens natively. Holders risk losing out on a portion of daily staking rewards if they choose to provide stETH as liquidity across such platforms - the token can only be made DeFi-compatible through wrapping. Furthermore, stETH holders do not benefit from rewards in the form of appreciated token value, which was the rationale behind the $LTO staking proposal made earlier.

Frax’s model eliminates risks associated with rebasing and simplifies DeFi integrations. The frxETH stablecoin doesn’t rebase and is fully backed by ether and the protocol’s AMO multisig (algorithmic market operations). If users prefer staking rewards, they can stake for sfrxETH, which also benefits from price appreciation (like the Yearn vault token).

The frxETH AMO

The secret to frxETH’s juicy yields is the frxETH AMO and its liquidity flywheel.

The purpose of the AMO is to:

• Generate overall ETH/frxETH liquidity;

• Grow protocol-owned liquidity (POL) + farming revenue;

• Capture arbitrage profits.

As it’s a comprehensive, we won’t delve into it in this article. To learn more about the specific mechanisms of the AMO, I recommend reading this article (wayback machine archived) and this thread.

frxETH Performance

Frax’s flywheel has been spinning to great effect, generating the fourth highest TVL in the LSD market with $409m staked ETH. Staked Frax Ether has also consistently ranked among the highest yield-generating LSDs, with a current APR of 4.97%. The TVL of the frxETH pools on Curve is approximately $230.7m, spanning 16 different trading pairs.

Sam Kazemian has been quite transparent about Frax’s strategy, which is underpinned by the concept of stablecoin maximalism. Sam posits “most crypto will converge to become stablecoin issuers in the long-term”, and in such a world, a stablecoin’s success should be measured by its monetary premium - its inherent utility.

Frax is focused on building stablecoins, and $frxETH is a form of stable ether, joining its two other stables: $FRAX and $FPI. With the existence of Fraxlend, Fraxswap, Fraxferry, Curve liquidity pools, and an intent to pursue a Fed Master Account, the hope is that this suite of services will engender demand and that elusive monetary premium.

$yETH (Yearn)

Never one to follow the crowd, the OGs over at Yearn have a long track record of blazing new trails. With all the sage self-awareness they’ve gained over the years, they’re wise enough to know that if you’re going to use LSD for expansion, you should quit being shy and take a heroic dose - maybe 5x the standard.

Of all protocols covered here, Yearn has taken the most unique approach. Due to a lack of perceived competitive advantage over existing protocols, the idea of creating a Yearn-themed LSD was rejected in favour of an LSD of LSDs.

In a nutshell, yETH is an Ethereum token backed by a basket of LSDs. Initially, this basket is set to include 5 different LSDs - likely all the blue-chips. By itself yETH doesn’t earn yield. yETH is intended to maintain a 1:1 peg with ETH, and must be staked for st-yETH to receive yield. 1 yETH corresponds to 1 ETH staked in the underlying LSDs, and to receive LSDs, it must be burned. In exchange for staking, users will earn compounded yETH from the underlying LSD’s yield as well as other protocol rewards such as swap fees and bribe yields.

The logic behind this design choice is to minimise risks of depegging/slashing events through diversification. The protocol functions as a dynamic, Curve-style stable asset pool, but differs in that each asset has a target weight as a percentage of total pool assets, and a band within which it can fluctuate. Another distinction is its alignment with Yearn’s unique competitive advantages:

• An existing war chest of CRV tokens, making it simple to incentivise liquidity for their planned Curve pool

• Expertise in liquidity management and yield optimisation strategies

• A solid reputation within the DeFi ecosystem

• Close relationships with numerous influential DeFi protocols

  • yVaults are already soon to receive rewards from Alchemix, Qidao, Alluo and more

The yETH launch date is currently unknown but expected to launch very soon - within a couple weeks

Other interesting LSDfi projects and news

Projects:

_{Note: As with any hot narrative, there will inevitably be a huge number of scam projects. Be safe and do your own research.}

The LSDfi narrative continues to strengthen. Here are some worthwhile projects to monitor:

🐦️ Swell Network ($swETH) - Ethereum liquid staking protocol

• Swell went live May 24th, officially launching the Swell DAO with its “Swell Voyage” campaign.

• $swETH is the #11 LSD by TVL, with $31.86m locked.

• Venture-backed by Framework Ventures, Maven 11 Capital, Apollo Crypto, Mark Cuban and others.

• Curve proposal for a frxETH / swETH gauge recently approved

• Swell Network Dune Analytics dashboard

🐦️ Origin Protocol ($OETH) - ETH vault yield aggregator

• Launched on Ethereum mainnet May 17th

• OETH is backed by liquid staking tokens instead of stablecoins or just ETH.

  • Users can deposit wETH, stETH, rETH or frxETH to earn optimised yields on LSDs.

  • Users can also deposit ETH and sfrxETH through Origin’s Zap function.

  • OETH is redeemable for underlying collateral at any time.

• Collateral is optimised between either validator rewards or liquidity provision on AMMs.

• The Castle Chronicle notes that smart money activity has been detected in $OGV (Origin’s governance token)

• Proposal for a frxETH / swETH gauge on Curve is now effectively approved after voting

• OETH uses 20% of yield generated by the protocol to buy and vote-lock more CVX to guarantee bribe rewards on Convex.

🐦️ unshETH ($unshETH) - Marketplace for staked ETH liquidity

• Diversified liquid staked ETH basket, backed by underlying LSDS (rETH, wstETH, cbETH and sfrxETH). Stakers earn yield from staked ether, swap fees, and mint/redeem fees.

• Promotes validator decentralisation by increasing competition among LSD protocols.

• Total Value Locked $40.2m - $33.4m on Ethereum, $7.44m on BNB Chain (Dune Analytics).

• unshETH is also an Omnichain token, on both Ethereum, BNB Chain, and now live on Arbitrum. The protocol is undergoing its third audit with Paladin Security

• Users can lock their $USH (governance token) for $vdUSH, earning boosted APRs from partner protocols, and gaining the ability to vote on the composition of LSDs, USH incentives, and fee parameters.

🐦️ Gravita Protocol ($GRAI) - Borrowing protocol for ETH LSTs

• Builds off Liquity’s model, essentially a fork

• To borrow, you need to open a Vessel (vault) where you deposit LST collateral against which you can borrow Gravita’s stablecoin $GRAI

• Last week $GRAI minting was enabled using wETH, rETH, wstETH and blUSD

• gud TL;DR thread

🐦️ Parallax Finance - LSD Yield Aggregator

• Focused on yield aggregation, offering composable yield strategies as its token

• Fastest-growing yield aggregator on Arbitrum

• No token yet

🐦️ Lybra ($LBR, $eUSD) - Interest-bearing omnichain stablecoin backed by LSDs

• Lybra’s $eUSD is an interest-bearing stablecoin with a 1:1.5 collateral ratio (1 eUSD is backed by $1.5 of ETH/stETH). Users deposit ETH/stETH to mint eUSD.

• Key Stats:

  • $88.95m stETH deposited, $34m+ eUSD borrowed and in circulation, 11k ETH converted to stETH, $88k eUSD yield paid to holders

  • $LBR price $1.74, circulating supply 6.29m, market cap $10.77m

  • Dune dashboard

• Announced v2 plans, including:

  • Expanding supported LSD collateral (rETH, stETH2, wBETH, swETH and tapETH).

  • Making its first move cross-chain with Arbitrum, and will be omnichain by integrating LayerZero

  • Tokenomics upgrades: LBR to become deflationary via burns, small portion of supply going to reserves.

• Testnet next month, and mainnet scheduled between July and August

🐦️ Pendle ($PENDLE) - DeFi Yield Trading Protocol, enabling Yield Tokenisation (separation of yield & principal) and Discounted Assets

• Really gud project - worthy of its own article.

• Revelo Intel: Complete project breakdown and timeline of Pendle.

🐦️ Equilibria - Yield booster on top of Pendle

• What Convex is to Curve, Equilibria is to Pendle

• Equilibria tokenomics revealed

🐦️ Penpie - DeFi platform providing Yield & veTokenomics boosting on Pendle

• Focused on accumulating vePENDLE to get governance rights + increased yield from Pendle Finance

🐦️ Agility - LSD Liquidity Layer & Trading Platform

🐦️ Assymetry Finance - safETH token backed by basket of LSTs

🐦️ Stader Labs - Non-custodial and secure liquid staking

• Live on Hedera, Polygon, BNB, Fantom, Near & Terra 2.0

• Launching $ETHx, claimed to maximise staking rewards on ETH

🐦️ StaFi Protocol - Cross-chain Staking Derivatives Protocol

News:

• Metamask is expected to facilitate direct staked ETH withdrawals on both Lido and RocketPool

• Celsius exited their entire stETH position after the v2 upgrade, representing 95% of the total 450k ETH withdrawn.

• Ankr is preparing to introduce its liquid staking solution to Tenet, a new L1 protocol backed by a basket of LSDs

• Aave discussing the possibility of converting its treasury $wETH holdings into stETH and rETH to improve the yield of the DAO to around 68% APR

• “Do you need to think twice before restaking your assets?” (Unchained Podcast w/ founders of EigenLayer & Lido)

  • Vitalik fires back with new article, arguing “dual-use of validator staked ETH is fundamentally fine, but attempting to ‘recruit’ Ethereum social consensus for your application’s own purposes is not”.

  • The article explains why a certain subset of techniques bring high systemic risks to the ecosystem and should be discouraged - “Don’t overload Ethereum Consensus”

• ETH staked has risen 4.4M since the Shapella upgrade

• The next generation of stETH pool is live on Curve. With a reliable price oracle finally in place, it’s possible we may see a crvUSD LSD coming soon.

🤯  EVERYTHING ELSE

• Maker founder Rune releases Endgame roadmap

  • Comprised of 5 major product launches, involving a new brand, new stablecoin and governance token, and 6 new SubDAOS.

• Pulsechain, Richard Heart’s L1 went live on mainnet along with the PulseX DEX and Pulse Bridge.

  • Pulsechain is a fork of the entire Ethereum system state, airdropping a copy of all ERC-20s on PLS (PRC-20s).

  • According to DEX Screener Pulsechain currently has the 4th highest 24H volume of all L1s ($225.7M). At one point it surpassed BSC, sitting in the #2 spot.

  • At present, Pulsechain has a TVL of $417.9m, ranking #8 among all Chains one spot behind Avalanche (DeFi Llama).

  • $PLS is confirmed to be listing on OKX this week.

  • Truly one of the most fascinating experiments in crypto right now. Richard Heart is a black sheep on this side of CT, but what he’s doing right now is impressive and you would be wise to pay attention. I will write a full article on the Pulse ecosystem very soon.

• Ledger’s CEO responds to backdoor accusations over latest firmware update ”Ledger Recover”

  • Confirms that if subpoenaed by the government, they would turn over the three encrypted shards, giving them access to your wallet

  • The service is optional - users who are uncomfortable with the update can continue using their device without it

  • Trezor sales soar 900%.

• GMX v2 testnet is live

• Worldcoin raises a $115m Series C, funded by Blockchain Capital, a16z, Bain Capital Crypto & others.

• FTX offloads derivatives unit Ledger X to MIAX for $50m, while recent bankruptcy filings reveal plans for a rebooted “FTX 2.0”

• Balancer launches concentrated liquidity pools in collaboration with Lido and Gyroscope Protocol.

• Synthetix flips GMX in trading volume after launching an incentive program.

• QuickSwap (the leading Polygon DEX) launches QuickPerps, their new decentralised Perps Exchange

🦎 TODAY’S SPONSOR - NATIVE

Native is building crypto’s invisible DEX layer. It turns exchange into a feature any app can add in 1 day, fixing the swap experience for average users and solving token management for project teams.

What does this actually mean? It means that projects now have the tools to create THEIR OWN in-app DEX, allowing them to transact directly with their community! For example, let’s say I was the Founder of NFTitties and I wanted to create my own DEX… let’s call it TittySwap. Would that be possible? Yes, it’s already been done!

So how can you get exposure to Native?

🚨 From May 1st - May 15th, Native held a trading competition, with the opportunity to earn 1 of 4 tiered NFTs that will play a SIGNIFICANT role in their governance token distribution… 👀

The Clash of the Traders results are now live! Check your rank at https://www.native.org/competition/ and search for you wallet address on the Leaderboard page. The Emojis at the front of your wallet address indicate the NFT you have won:

💎 Diamond Rank Chameleon NFT
🥇 Gold Rank Chameleon NFT
🥈 Silver Rank Chameleon NFT
🥉 Bronze Rank Chameleon NFT

Further instructions on how to claim your NFT will be shared soon!

Twitter tweet

🦎 Visit the Native website for more details.

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless from DeFi Raiders shares his favorite early-stage projects.

@TheRel3ntless_1

🐦 Vone Protocol - Interest-free borrowing utilising $ARB.

From the platform that houses $VUSD, an over-collateralised stablecoin native to the Arbitrum network. Interest-free borrowing is certainly enticing…

🧵 A thread on Vone.

🐦 Dionysus Finance - DEX launching on Polygon.

Alpha testing ongoing that can earn an airdrop at launch. Airdrop plus high yields at launch could be a good opportunity to make money.

🐦 Hoyu IO - Permissionless money market that accepts any asset as collateral.

The evolution of money markets is happening quickly and the ability to offer any asset with liquidity as collateral is the next major step.

🐦 Ordinals Anon - Privacy centric NFT project on Bitcoin.

Privacy + $BTC… what more do you want?

DEGEN PLAY OF THE WEEK

DYOR, ape at your own risk!

🐦 Karrot: Debasing project on zkSync, recently launched.

🧵 A thread on Karrot.

🎙 Hunting for Alpha Recap

Another week, another top-tier project. This week, Artemis hosted Revest Finance, a flexible and highly configurable toolset for creating financial NFTs (FNFTs)

🕵️‍♂️ REVEST - PROGRAMMABLE MONEY.

🔊 Re-watch the full Twitter Space Recording below.

Twitter tweet

🔊 Or listen to the full episode on Spotify.

Revest - Programmable Money

Listen to this episode from Hunting for Alpha on Spotify. Revest is a flexible and highly configurable tool set for creating financial NFTs (FNFTs). Follow Revest on Twitter @RevestFinance and follow along @huntingforalpha.

open.spotify.com/episode/3OBjcqsat5nc2vsFkEkIda?si=55c7583dc1a84b29

 🏹 Community Updates

💪 Community Alpha

• Artemis and friends have begun hosting a weekly Twitter Space to spill even more alpha. These Spaces are unrecorded, so turn on your notifications!

Twitter tweet

• Vulcan’s Blacksmith launching soon.

Twitter tweet

• Snake’s megathread on Web3 Gaming Ecosystem blows up.

Twitter tweet

• Chadnik drops a thread on the Native Rebellion

Twitter tweet

And that’s all for this week.

Until next time,

Sending Alpha 🥂

Thanks again to our sponsor Native. Native is crypto’s invisible DEX layer, turning exchange into a feature any app can add in 1 day. See for yourself at native.org.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

Arming the Rebels against Exchanges

Table of Contents

1. Introduction

2. 🌊 The Role of CEXs

3. 🧮 AMMs and Pricing Models

4. 🔫 The Shopify for DEXs (Arming the Rebels)

5. 🤔 What’s the catch?

6. 💪 Take the power in your own hands

7. Conclusion

_{Disclosure: This piece is sponsored by Native. We only work with projects we believe in and use ourselves. This is not financial advice, do your own research.}

Pictured: A founder questing for a little liquidity

Introduction

Centralized Exchanges unquestionably reign as the titans of the crypto industry. They serve as the most dominant piece of infrastructure in the ecosystem, easily the number one source of liquidity for the entire industry and acting as the single gateway through which you can enter and exit the space.

However, they are not without their flaws. Their massive revenues are drawn from the pockets of smaller players, and our reliance on them grants them incredibly strong market power.

Decentralized exchanges present a captivating alternative, offering a balance of power more aligned with the ethos of crypto. But there are no free lunches; this increased control comes at a different expense. In this case, that cost is capital efficiency—liquidity becomes fragmented across the ecosystem, slippage is inevitable, and providing liquidity demands constant vigilance to avoid impermanent loss.

Decentralization is not binary; it exists on a spectrum. Middle grounds may not be a thrilling topic of discussion, but within that vast unexplored territory lies a range of inventive solutions. To the chagrin of staunch ideologues, nuance and education become increasingly important here.

Venturing into this liminal space, Native returns with a unique solution. It all starts with the simple question: "How can we combine the benefits of both centralized exchanges and decentralized exchanges?"

Their response? A hybrid model that combines off-chain pricing with on-chain settlement and self-custody. This method more efficiently aligns the incentives of projects, market makers, and traders. To understand how, let's first examine the role of each of these participants. If you're already familiar with this topic, feel free to jump to the "Shopify for DEXs" section.

🌊 The Role of CEXs

I just want some DOGE, pls bruv

If you want to join the crypto circus, centralized exchanges are the gateway you must pass through. Exchanges have been crucial for the adoption of cryptocurrency and blockchains; without them, we'd hardly have an industry.

They embody all the benefits of centralization:

• Unrivaled financial and human capital

• Capital-efficiency

  • Deeper liquidity, better pricing

• More user-friendly

  • Technical knowledge not required, complexity is abstracted away

  • Intuitive UI

• Top-notch marketing exposure in the industry

• Strong connections in the industry

• Compliance with regulatory bodies (mostly)

For projects, a close relationship with a major exchange will put you on the map, or even on the throne. They provide the ultimate form of distribution.

However, this Faustian bargain for founders comes at a significant cost to their projects:

• Six-figure listing fees

• Monthly fees to maintain liquidity

• Value-extractive trading fees

• Loss of control over tokens (not your keys, not your coins)

Some founders see this as a necessary evil, while others view it as unthinkable. For the latter, decentralized exchanges remain an alternative option.

🧮 AMMs and Pricing Models

Decentralized exchanges are arguably the biggest success story in demonstrating a practical use-case for smart contracts, having hit their stride during DeFi Summer 2020. Not only are they a viable alternative to centralized exchanges, but they also function as crucial infrastructure in their own right – the 12-month DEX volume currently amounts to $907 billion.

Source: @hagaetc Dune Dashboard

Each DEX comes with its own tradeoffs and weaknesses, subject to the choice of pricing models an Automated Market Maker (AMM) uses. However, the pace of innovation and abundant competition is encouraging, providing many different options to users and projects based on their needs.

Some of the most popular AMM pricing models:

1. Constant Product formula (Uniswap v2)

   1. The OG x*y = k formula. For large swaps, slippage is significant.  

2. Concentrated Liquidity (Uniswap v3)

   1. Liquidity is concentrated over custom ranges instead of being evenly distributed across the price curve, leading to greater capital efficiency.

3. Liquidity Bootstrapping Pools (Balancer v2)

   1. Pools are launched with a project token and blue-chip collateral. Initially, the weighting is skewed towards the project token and dynamically adjusted over time, enabling Fair Launch Auctions and a more gradual price discovery process.

4. StableSwap Invariant (Curve)

   1. Invariant of constant product formula ideal for closely pegged assets (e.g. stablecoins). Highly efficient with minimal slippage.

5. [REDACTED]

   1. HINT: It’s the key to Native’s solution… (read on to find out 😉).

The technical innovations behind these solutions are very exciting, but Decentralized Exchanges are still in their infancy, and trading volume of Centralized Exchanges are 7-10 times higher. Here’s a visualization for comparison:

I f*cked up my math here, but you get the idea.

Liquidity is king. If you’re a whale, capital efficiency is the key to avoid getting cucked into oblivion through slippage like this individual:

Twitter tweet

If only there were a middle ground…

Private Market Makers (PMMs)

1. Entities that fulfil buy and sell orders through APIs.

Source: 0x Docs

This PMM approach combines the best of both worlds.

Off-Chain Liquidity + On-Chain Settlement

By partnering with PMMs on the back-end (who account for over 30% of daily crypto trading volume), Native’s team of quants exploit this flexibility for greater capital efficiency and pricing. A Request for Quote (RFQ) is sent to their PMM partners, and if their price is more competitive the swap will be routed via them. If not, swaps will be routed via a cheaper option, like a DEX. Users sign their order and transact peer-to-peer, retaining custody of their assets throughout.

In many ways this is similar to the promise of Layer 2s - scaling transactions on a separate blockchain, but inheriting security by posting finalized proofs back to Ethereum.

🛒 The Shopify for DEXs

⚔️ Arming the Rebels 

Native describes itself as “the invisible DEX layer for crypto”, providing the infrastructure for project founders to create their own DEX in just 5 minutes.

This playbook is a proven one, reminiscent of Shopify’s strategy to compete within the e-commerce space. As a monopoly, merchants are at the mercy of Amazon’s marketplace. Your fate as a seller is determined by Amazon’s search engine and your page ranking within your category.

Shopify found success by taking a different approach - arming the rebels. They built a platform to make commerce available for everyone, empowering SMEs to become more competitive. Their cloud platform provided all the tools needed to build an online shopfront quickly and affordably, fulfilling all front and back office needs in one app.

Native is doing the same for crypto founders.

Instead of listing on an exchange and striking a deal with the devil (which is out of reach for new projects anyway), founders can leverage Native to create their own DEX… for free.

The Benefits:

• Quick set-up (5 minutes)

• Completely free (no fees)

  • Native provides the liquidity, not you

• Capital-efficient

  • Native’s PMM network provides CEX-level liquidity and pricing

• Control

  • Retain your own tokens

  • Choose any desired trading pairs

  • Set your own swap fees

  • Users self-custody their assets, settling transactions on-chain

• Unlock new revenue streams

  • Swap fees go to token issuers

• Composability

  • DEX serves as a widget, embeddable in your website or dApp

  • Future possibilities: Discord widget, browser widget

• Enhanced community engagement

  • Greater control for the project = greater community influence

  • New revenue can fund development, growth, piñatas… anything really. DAOs could vote on allocation.

  • Reduced swap fees for the community minimizes value leakage

We decided to try it for ourselves - visit the Hunting Alpha DEX to trade through Hunting Alpha.

🤔 What’s the catch?

It’s a reasonable question, and likely the first one that comes to mind. This was indeed a frequent query regarding Native’s proposal for Venus to deploy its own in-app DEX (rather than PancakeSwap). Here are the responses from the Native team:

The Snapshot Vote passed with 100% in favor.

💪 Take the power in your own hands

Native’s “invisible DEX layer” product offers a bold solution to a real problem. Liquidity is like oxygen to a young protocol, and the long-tail of projects facing this issue are underserved. At the very least, it provides a third option for founders to explore, making the industry as a whole more competitive.

The crypto industry remains in its embryonic stage, and solving infrastructure challenges is a prerequisite for achieving mass-adoption. This was central to Nomad Capital’s investment thesis when they recently led Native’s $2m seed round:

Our friends at Arbela address this Middleware problem-space in their latest report. For a more unbiased perspective, check out their recent Analyst Report on Native.

Conclusion

My favorite aspect of Native’s solution is incredibly simple - it aligns incentives for all parties involved.

A few years ago I interned at Mitsui, one of Japan’s sōgō shōshas (very large, very old multinational companies). Mitsui was founded in 1673, during the Edo period.

I learned a valuable lesson there that has stuck with me ever since. One day a director gave us a presentation on the company’s values. Its core value, the secret to it enduring 350-year endurance, was this: the three-way win.

Win-win-win: good for you, good for me, good for everybody.

I always search for this basic dynamic in projects, and Native is a prime example.

Good for you (founder): Reasons outlined above.

Good for me (Native): Earns revenue from private market makers.

Good for everyone (PMMs): Tap into a new market (the long-tail of crypto projects) and still earn a profitable spread.

Sounds like a three-way win to me.

Until next time,

Sending Alpha 🥂

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

Our good friends at Castle Capital are a truly talented group of investors. With deep research and analysis capabilities, their newsletter is one of the best in the game.

👾 Web3 Gaming Ecosystems👾

Table of Contents

1. ⛏ Picks and Shovels

2. 🕸 The Ecosystems

   1. ✨ Treasure

   2. 🐦Gala Games

   3. ⛓ Ronin

   4. 🖇 Immutable

   5. 🔲 Ultra

   6. ✖ XPLA

   7. 🌴 Oasys

   8. 🌊 Myria

   9. 💠 Iskra

   10. 🔥 WAX

3. Honourable Mentions

⛏ Picks and Shovels

As the famous Mark Twain quote goes:

Image source: https://www.azquotes.com/quote/846550

How does this apply to web3 gaming?

As mentioned previously, the blockchain space is very sporadic – there is no 'one-stop-shop' such as the Steam store for web3 games. This creates different solutions to house these types of games. We see everything from teams building their own dedicated blockchains specifically for gaming – to gaming ecosystems building on established blockchains – all the way to games going it alone and building straight onto a native blockchain.

Whilst it may be hard to pick emerging individual winners in terms of games in this space. It may be much more beneficial to pick the ecosystems where users will be interacting in the future.

Fig 1: Monthly Active GameFi Users. Source: Footprint

The overall market participants across web3 gaming at the time of writing are around 1.8 million users. This trend is likely to increase over the coming years as more traditional gamers are onboarded to the space.

Where will these gamers flock to? Let's dive into some current solutions.

The Ecosystems

✨ Treasure

The Treasure ecosystem has been exciting to watch over the past couple of years. From humble beginnings of being a Loot fork, they developed and came into their own on the Arbitrum blockchain.

Building on Arbitrum means the treasure ecosystem inherits the native transaction speed, transaction time, and security that this blockchain offers. Treasure prides itself as one of the most established ecosystems that have built onto a native blockchain.

Source: Treasure.lol website

Boasting 13 games this ecosystem is working on interoperability between the apps with its native $MAGIC token being a key driver behind the platform.

This is a more crypto-native community of builders and users so game economies reflect that within this ecosystem.

Fig. 2. Source: Dune

Whilst there are an array of games on offer here it still seems to be only a tight-knit community playing them, with weekly active users slumping to below 10,000 as seen in Fig. 2.

Investable asset

The investable asset from here would be the aforementioned magic token. This generates fees by charging players in the native token to use the marketplace to purchase NFTs. The Average weekly volume of their marketplace is around $500,000 with 4% going back to the treasury – it means since inception the marketplace has made close to $7 million in fees (1.5 years).

Source: John Patten Twitter

By investing in Magic you are making the bet that teams or indie developers would prefer to build with an established community of crypto native gamers as John Patten (co-founder of treasure ecosystem) points out.

---

🦜 Gala Games

Equating to 3% (53,000) of all users in web3 gaming at the time of writing – Gala has developed its own layer 1 blockchain solution to entice players to its ecosystem.

Source: Gala

Its focus in 2023 is on the mobile gaming market and it has already deployed $150 million of funds to help kick-start this endeavour. One of the novel ways Gala aims to solve the mostly extractive nature of 'P2E' economies is the development of an honour system that it has introduced in one of its flagship games – spider tanks. The honour system creates a dynamic whereby the user can claim more rewards if they are seen to be doing positive actions in-game. This change in mechanism puts a greater emphasis on playing rather than value extraction.

Investable Asset

The investable asset for the Gala ecosystem is the Gala token – an ERC-20 token currently residing on the Ethereum blockchain. The token is used to power gas fees across the Gyri network and for purchases of in-game items across the ecosystem. Even if a specific game has its own in-game currency – marketplace purchases and transactions buy and burn the gala token.

Source: Gala

Another way a user can get exposure to the ecosystem is by purchasing a node to secure the network and earn rewards in the form of Gala. A node costs 2.2 million Gala tokens which is $88,000 at the time of writing. At the moment there are around 30,000 node validators with a max supply of 50,000. The emissions that are divided between node operators are 8,561,643 gala tokens per day which put the nodes at an average earning APR of about 4.5%.

---

⛓ Ronin

Sky Mavis has created their own permissioned EVM sidechain to house the hugely successful Axie Infinity game and many others that are now in the pipeline. Akin to Gala – Ronin is also going after the mobile gaming market which is the largest player base in the gaming space by orders of magnitude.

Source: Axie Infinity

The rise of Axie infinity really sparked the play-to-earn phenomenon in 2021. It was very successful – at its peak bringing in nearly 3,000,000 active players. The game still has over 80,000 monthly active users making it still one of the most successful games in the space.

The Ronin network did have a bumpy start (to put it lightly) with a $600m bridge exploit in 2022 – the largest exploit in crypto history at the time. Since then, however, it has gone from strength to strength, implementing a delegated proof of stake network (DPOS) where there are now over 22 daily validators competing to create blocks and earn rewards, thus creating more security on the network.

Source: Ronin Chain

With a combined total value locked from the Katana DEX and validator staking, the network has over $200m in TVL spread between delegators and liquidity providers on the dex.

Investable asset

With a market cap of $280m the $RON token powers this ecosystem. Users can earn this token by delegating to the 22 validators to earn daily emissions or they can use it to create LP positions on the katana dex.

Fig. 3. Source: Ronin Chain Documents

Supply is set to double over 2023 (year 1 - year 2). Not all of this supply may hit the market however as the team will be looking to create partnerships in exchange for tokens as they have already onboarded 5 new game studios to build on top of Ronin.

---

🖇Immutable

Source: Immutable

With over 100 games on offer and a huge $1bn in ecosystem funding – Immutable is one of the largest players in web3 gaming.

The immutable ecosystem is built on top of Ethereum on its bespoke layer 2 blockchain. Recently it partnered with Polygon to create a zkEVM to scale transactions on the network meaning more power for the IMX token as this translates to the token being used for gas fees on the network.

Immutable is aiming its sites at traditional gamers with flashy AAA games to onboard new users. As can be seen from games like Illuvium, the budget for these types of games is much bigger than most games coming out of web3 at the moment so this network could be the catalyst to show traditional gamers that blockchain games are not just "defi with extra steps".

Fig. 4. Source: Dune

Investable asset

As seen from the Dune dashboard the number of users interacting with the $IMX (the token powering the ecosystem) has reached over 100,000. IMX is used for gas fees on the network with 2% of all sales from the NFT marketplace going to the treasury.

According to data from CryptoSlam, the network has about 15,000 monthly active users trading assets across the marketplace, with an average of about $20 million in trading volume per month which is equal to the protocol earning $400,000 per month on a 2% fee.

The whitepaper states there is no entitlement of protocol fees if you hold the IMX token, however, holdings can be considered to receive staking rewards if you hold the token on the L2 and have either traded or also hold an NFT on the network.

The token inflation is outlined below. Most of the tokens are under the 'Ecosystem' category and will be used for liquidity provisions, grants and marketing purposes.

Fig. 5. Source: IMX Whitepaper

---

🔲 Ultra

Ultra is aiming to be a one-stop shop ecosystem for a frictionless entry to web3 gaming.

Source: Ultra

The Ultra blockchain runs on a fork of the EOS blockchain – it has its own wallet and NFT marketplace called Uniq. It is aiming to abstract the user experience of current wallet setups and give gamers a version of what they're used to with a type of 'Steam store' experience, which could be considered a web2.5 approach.

Users can launch the game store on April 25th with titles to buy including RPG games and a trading card game amongst others. What makes this marketplace unique is the fact that the player can re-sell their game into the market much like you would a physical copy of a game in a traditional game store. This article from the

Ultra website explains how this may be revolutionary to online gaming.

It is clear the ultra team are going after traditional PC gamers with their take on a PC game store with most of the digital assets being the games themselves as an NFT token that could be re-sold.

---

✖ XPLA

Source: XPLA

Whilst not 100% a gaming blockchain platform – XPLA is aiming to be a blockchain for multimedia with its focus initially on gaming. XPLA is built through Tendermint and the Cosmos SDK, it will also enable an EVM chain to take advantage of users and developers coming from Ethereum-based blockchains.

XPLA incorporates a game launcher whereby a game development team has to submit a playable demo for users to vote it into the ecosystem. This may create an interesting scenario where users feel like they have control over a game publisher which could foster a deeper connection to an ecosystem.

There seem to be 6 indie games launched through XPLA at the moment with more in the pipeline. Com2us the South Korean mobile gaming giant is the service provider for the XPLA project – with their experience in the mobile game sector, this could push Web3 gaming in South Korea.

---

🌴Oasys

Source: Oasys

With gaming giants such as Ubisoft and Square Enix as validators for its PoS blockchain – Oasys is establishing itself as one of the more serious contenders for attention in the web3 gaming space.

Oasys is set up as the layer 1 blockchain, whilst games and gaming ecosystems can build on top of this using optimistic layer 2's called "verses" as detailed in their whitepaper. Whilst it is not a permissioned blockchain as such, it is costly to build a verse on Oasys (1 million $OAS tokens) which may prove to weed out the scams wanting to deploy here.

Source: Oasys

There are currently 5 verses totalling 28 projects building on Oasys. Much like Ronin, Oasys is targeting the Asian market initially with founders from Japan and being also based out of Singapore.

Investable asset

The $OAS token is the asset that holds the ecosystem together. This will be used for transaction fees on the network and for governance. Verse builders also need to purchase these tokens to create their own ecosystems on top of the layer 1 blockchain, so in time if this is the place developers want to build – these tokens will have to be bought.

Fig. 6. Source: Oasys whitepaper

As can be seen, the total supply of OAS is 10bn with supply being fully vested after 6 years. This puts it at an extremely large FDV of $1bn compared to $35 million $SOAS (current stake-able OAS tokens).

---

🌊 Myria

Myria is a Layer 2 solution to Ethereum built using starkware. It is aiming for a permissionless blockchain meaning anyone can build on top of it – targeted at gaming teams.

Source: Myria

Myria will host a roster of games if all are to make it out of development. There are over 100 games on their ecosystem page that are tagged as 'in development' with currently no games playable just yet, however, there are some early access alpha tests coming up for some.

Investable asset

The Myria token is the currency NFTs will be bought and sold through on the Myria network and associated marketplaces. Interestingly it is not used for gas fees. Games may also use it as part of their economy – which remains to be seen yet.

Users can also purchase nodes with Myria tokens to secure the network and also earn daily rewards in Myria. A node is currently $4505 with incremental price rises as more nodes are purchased. There are a total of 40,000 nodes available for purchase with 6000 sold in a private sale and around 245 currently sold in the ongoing public sale.

Fig. 7 Source: Myria

---

💠 Iskra

Iskra launched in Q4 2022 and has developed its own blockchain called the Iskra Hub. It aims to be a layer 1 where game-specific chains could build on top of it and create their own economies all whilst harnessing the community and interchain economy of Iskra.

Source: Iskra

Iskra only has 1 playable game out at the moment called 3 Kingdoms Multiverse which is available on Android and has had about 10k downloads. 5 other games are tagged as in development on their website. So how does this explain 1.5 million wallets interacting with Iskra as seen from the Dapp Radar rankings screenshot below?

Source: Dapp Radar

This can be explained by a wheel spin minigame that is playable on the Iskra website. Once signed up a user can spin the wheel for a chance to win Iskra tokens or an NFT. it seems most of these 'unique wallets' will be controlled by a much smaller number or more likely – bots.

Investable asset

The token associated with the network is $ISK.

Fig. 8. Source: Iskra Whitepaper

The total supply is 1bn with yearly vesting from different tranches. The biggest portion of distribution rewards goes to Pioneer NFTs – these are the second investable asset in the ecosystem.

The Pioneer NFTs act as the nodes securing the network. There are 40,000 NFTs with 6,000 being sold in a private sale and at the time of writing 800 being sold in an ongoing public sale where prices are currently at $7,600.

---

🔥 WAX

Wax is the OG gaming blockchain. Launched in 2018, its use case was very cheap microtransactions where games could come on-chain. However, it doesn't seem to have kept its market share.

Fig. 9. Source: Footprints

With that being said it still has some of the most adopted games in web3 with 3/6 of the top games on Dapp Radar being from the Wax blockchain.

Source: WAX

It is a DPoS blockchain meaning users can stake their WAX token to validators to secure the network. Prior to the blockchain – the team had experience with game marketplaces such as Opskins and WAXpeer where users could sell items such as CS:GO skins.

Investable asset

As previously mentioned WAXP can be staked to validators and used for transaction purposes on the network. It is also used for governance.

Source: WAX Tokenomic Model

As can be seen, Wax exists on both its own network and Ethereum for Defi purposes. It makes revenue by charging fees on sales and transaction fees. The reason why Wax seems to have fallen by the way could be explained by its NFT sales volume. In half the amount of time it has been around – Immutable seems to have done nearly the same amount of NFT volume that WAX has according to Cryptoslam. This gap only seems to be growing, as within the last 30 days Immutable did $26 million worth of volume, compared to $2 million on WAX.

Honourable Mentions

Ones to watch.

📺 Beam

Merit Circle – the gaming guild has recently pivoted to building its own blockchain for gaming. The blockchain is housed on Avalanche's network of subnets.

Source: Beam

4 games have been slated for launch when Beam is live as well as an AMM and NFT marketplace to house the in-game tokens and non-fungible assets associated with the games.

MC will be the token used for gas fees on the network meaning if the chain is used then circulating supply will be taken off the open market to pay for transactions.

🍎 Magic Eden gaming

Originally developed as an NFT platform and marketplace, Magic Eden recently launched its gaming arm of the platform.

Source: Magic Eden

Originally launched on the Solana blockchain – Magic Eden has become an NFT marketplace giant and it's clear where they want to push into next.

The marketplace has cleared$1.9 billion in secondary sales volume and could become a hub for gaming assets to congregate.

🔼 Fractal

Source: Fractal

Fractal is a game aggregator originally built on Solana but has since integrated Ethereum and Polygon blockchains. Users can discover games on these networks and take advantage of tournaments regularly held on the platform.

It also boasts gaming NFT trading for the games featured, where players wouldn't necessarily need to leave the platform to trade their rewards or purchase new items for their games. The volume hasn't matched Magic Edens' however, so it still seems users prefer this marketplace to trade on.

Justin Kan – founder of Twitch is also behind this platform so if his track record is to be trusted then this platform could have the potential to take off.

🚀 Tavaera

Source: Tavaera

Building on zkSync era – Tavaera is creating its own ecosystem on zkSync technology including its own game and blockchain specifically for web3 gaming. I expect more ecosystems to crop up building on zk technology as many transactions can be processed at greater speeds with the security of the Ethereum layer 1 blockchain.

🔽 Versa Games

Versa is a gaming DAO built on Polygon to get users to interact with web3 games by providing a sort of storefront approach. Their services include liquidity as a service – by providing games with some defi solutions, the developers can focus on the game itself by abstracting their economy to a certain extent.

Source: Versa

Conclusion

The race is far from won with who will take the most market share in web3 gaming. With new ecosystems coming to the market, there may never be one place in which gamers will interact with blockchain solutions.

Partnerships are also being forged on a monthly basis which is great for the industry as a whole because composability is one of the main advantages of web3 gaming.

So can we point to undervalued solutions in the gaming sphere?

Fig. 10. Source: Table of metrics aggregated from various sources

Whilst it may be too early to call what is 'undervalued' at the moment because a lot of these ecosystems have just launched. It is clear from the data available that comparatively Ronin comes out to be the most undervalued. This is mostly because Axie Infinity catapulted Sky Mavis to the top of the rankings – it will be interesting to see if they can continue to stay on top.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

🏹 Dear Hunter,

It’s hard to believe, but Sending Alpha’s first month is in the books!

Thankyou all for your support. We greatly appreciate it 💕 

🏹 We’ve published four newsletters in just over two weeks, but now we’re ready to take things to another level.

To provide you with even more alpha, we must ask for a favor…

Complete the poll below to help shape the future of Sending Alpha!

How have you enjoyed the newsletter so far? Feel free to reply to email chadnik@sendingalpha.xyz with any feedback/suggestions you have! 🙂 

You can expect more deep-dives in May, including a holistic overview of the web3 Gaming Ecosystem, and a three part Deep-Dive on the NFTfi Ecosystem. Reach out if you would like to be a sponsor.

Here’s your April Recap

📫 Sending Alpha

The Weekly Hunt #1

Shapella, Regulatory Headwinds, and your Weekly Alpha [Apr 20].

sendingalpha.beehiiv.com/p/weekly-hunt

Omnichain Money Markets: TapiocaDAO vs. Radiant

TapiocaDAO vs. Radiant, an Analysis.

sendingalpha.beehiiv.com/p/omnichain-money-markets-tapiocadao-vs-radiant

The Weekly Hunt #2

The U.S. Regional Banking Crisis, Decline of the Dollar, and your Weekly Alpha [April 28].

sendingalpha.beehiiv.com/p/weekly-hunt-a152

The Weekly Hunt #3

Blur, Sui, and your Weekly Alpha [May 6].

sendingalpha.beehiiv.com/p/weekly-hunt-3

🎙 Hunting for Alpha

POWER Tokens (IPOR) - Cutting edge tokenomics

Dimitar from IPOR explains IPOR’s POWER TOKENS, an improvement on the classic veTOKENOMICS that is now open source for other protocols to use.

open.spotify.com/episode/0o1lycB9tjcwmdARBB6Zsu?si=7898f1855031422d

Crypto Tax Calculator - All things Tax

Crypto Tax Calculator shares the latest trends in crypto taxation, and explains how different crypto (NFTs, Borrowing + Lending etc) are taxed in different countries.

open.spotify.com/episode/7eDPeKioTGJ733spzGKn9a?si=051fe305528c439d

Intelligence On Chain - A Safer Crypto Experience

In 2022 $1.2 Billion Dollars was stolen in hacks in the crypto ecosystem. Intelligence On Chain discusses their detective work in crypto and how everyday users can make their wallets safer.

open.spotify.com/episode/7iI3j969E53EY2tJ4G8pU3?si=a1740f0742674676

Native - The Shopify of DEXs

Native is the invisible DEX layer where anyone can create their own DEX in FIVE MINUTES

open.spotify.com/episode/0vft5MuJsbkKkzGZ8pEzFe?si=c757d376704c48a9

_{Disclaimer: Nothing discussed on this podcast is or should be construed as financial advice. We may or may not hold investments in any projects appearing on the podcast. Please do your own research}

Have a Great Weekend,

The Sending Alpha Team 🥂

📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (Apr 29 - May 6)

BTC $29,289 (+0.67% 7D)
ETH $1,935 (+1.35% 7D)
BTC Dominance 48.56% (+2.66% 7D)

BTC price action followed a nice V-shape this week. Last Saturday BTC was at ~$29,344 before falling 5.64% to a weekly low of $27,673 on Monday. Since April 30, 5k more bitcoins have been sold, but at the time of writing price has fully recovered. BTC now sits at $29,289 - a full 7 day round-trip.

Economy Heat Check

As of 5/3/23 market close. Source: Eight Ball newsletter.

• The Fed raised rates 25bps yesterday from 5% to 5.25%. A 16-year high. this marks the Fed’s 10th consecutive rate increase.

• Fed officials signaled a possible pause in raising, but are waiting to see inflation cool down first.

• First Republic fails, becoming the 2nd-largest banking collapse in U.S. history.

Last week’s lead story covered the U.S. regional banking sector crisis in great detail. Get caught up here.

📜 Stories of the Week

It is better to act and repent than not to act and regret.

Here’s the top stories unfolding right now:

🙏 _{I won’t be talking about Gary or the SEC this week. Feelz good.} 🙏 

🟧 BLEND LAUNCH STANDS OUT (BLUR)

Blur launches its NFT lending platform Blend. Could this kick off NFTfi Summer?

Pacman has swallowed up more market share as Blur unveiled its new lending protocol Tuesday, Blend. The JPEG gambling trading platform of choice just became even more degen, as holders can now borrow against their Milady pictures for maximum leverage. Further, traders can now use a Buy Now Pay Later (BNPL) option to acquire NFTs with just a fraction of the full price as collateral.

Now I can finally own* an Azuki.

_*partially

Launching in October ‘22, Blur quickly made waves, seizing the #1 spot in NFT trading volume from OpenSea after airdropping 360 million $BLUR tokens in February. Despite a steep drop in token price and daily volume since then, Blur still maintains pole position, with roughly 60% market share to OpenSea’s 19%.

Source: @hildobby NFT Market Overview Dune Dashboard

Admittedly, volume figures alone are highly misleading, as no doubt a very large percentage of these transactions are farmers looking to capitalize on Blur’s Season 2 airdrop (purportedly ending in May). For now OpenSea still holds the crown, dominating in user count and total trades.

Source: @hildobby Blur vs OpenSea Dune Dashboard

OpenSea remains on the back-foot however as Blur continues to innovate at a faster rate. This trend only continues with the launch of their new lending protocol Blend.

What is Blend?

Blend is a new NFT lending platform that consists of two main features:

1. Peer-to-Peer NFT lending (for lenders and NFT holders);

2. Buy Now, Pay Later NFT purchasing (for traders / collectors).

Let’s quickly dive into both.

Peer-to-Peer NFT Lending

Peer-to-peer NFT lending models have existed for a while now, with market leader NFTfi having faciliated approximately $125 million dollars in loans for 155 different NFT projects since mid-2020.

Source: @gideontay NFTfi Dune Dashboard

What’s different about Blend’s offering?

With the help of the gigabrains at Paradigm, Blur has designed a new peer-to-peer lending mechanism featuring:

• No Expiries (PERPETUAL NFT LENDING… bruh)

  • Loans are perpetual by default (no fixed maturity date). Loans are open indefinitely, with a fixed interest rate agreed upon between the borrower and lender.

  • Borrower can close out their loans at any time (by repaying in full).

  • Lenders can exit at any time too by triggering a “refinancing” auction. This involves a Dutch auction where interest rates start at 0% and increase until another lender purchases the loan. If no lender steps in, the collateral is liquidated.

• No Oracles

  • Blend does not use price oracles to enforce liquidations, unlike the peer-to-pool (P2P) model. The philosophy underlying this is that loan terms for NFTs need to be set individually, on a case-by-case basis (unlike P2P which mostly uses floor prices).

  • Because Blend doesn’t need oracles, it can support whatever collateral types and LTV the market will bear.

Twitter tweet

Naturally, there are both benefits and drawbacks associated with this model.

• Pros

  • More flexibility for borrowers & lenders due to absence of loan expiration dates.

  • Dutch auction refinancing can help borrowers find new loan terms and lenders recoup their capital.

• Cons

  • Higher risk and effort for lenders since they must continuously monitor the value of NFTs.

  • Overall a more complex process than traditional peer-to-peer NFT lending.

Buy Now, Pay Later (BNPL)

• Pretty self-explanatory, working the same as existing BNPL models in other industries. Users can buy NFTs without needing to pay in-full upfront.

• Borrowers can either purchase the NFT outright once they can afford to, or sell if price appreciates and keep the profits.

  k

Traction

Whether due to airdrop incentives (absolutely), general degeneracy (ofc), or most likely a blend of the two (kek), Blur has already facilitated significant loan volume through their new platform.

• Within 24 hours, Blend facilitated over 500 loans worth over a total of 5,700 ETH (in comparison, NFTfi’s daily loan volume was 328 ETH).

• Within 3 hours of the launch, the platform’s trading volume doubled from 5,175.99 ETH to 11,010.77 ETH.

  _{Source: Blockworks}

Mind you this is with only 3 NFT collections currently supported - Cryptopunks, Azuki and Milady.

Twitter tweet

Now why might traction have been so strong? Could it be the impressive levels of gas optimization? Could it be the innovative perpetual loans and refinancing mechanism? Perhaps it’s the zero fees for 180 days?

Or maybe, just maybe…

AHHHH I’M FARMING

With Season 2 of the $BLUR airdrop anticipated later this month, lending points are included as a new addition. Create loan offers using ETH, and ye shall receive lending points.

Platform data shows these humble farmers have been hard at work, with multiple zero interest loans being offered (so generous 😍). A sexy product launch and significant loan volume didn’t pump the price like you might expect either, with $BLUR down 9% in the 24 hours post-launch.

Concerned individuals have been quick to point out the risks involved with increased financialization, leverage, and volatility into an already hyper speculative market. NFTs were the gateway drug for retail last cycle, but this kind of market highly favors whales and sophisticated traders who can avoid or absorb liquidation losses, not desperate NFT flippers. Just like the Season One airdrop where demand for Blur bid points became greater than the demand for NFTs themselves, it’s reasonable to assume we will again see this unsustainable market dynamic repeat itself.

Twitter tweet

In my opinion, NFTfi is not just vapor, but a truly exciting innovation. With the potential to help realize an actual mainstream use-case for crypto as non-fungible tokens are made liquid. If you lose your house leveraging long on a Milady, you don’t have anyone to blame but yourself.

The market is a democracy, and we should let people vote how they want…

Stay safu though. Educate yourself and know what you’re getting yourself into!

The Big Picture

For all the NFTfi Summer memes, NFTfi is clearly a market with legs. Still in its infancy, cumulative borrow volume has already exceeded $1 billion.

Source: @ahkek NFT Lending Dune Dashboard

We could very well be looking at the next bull-run catalyste here, luring retail back into the fold next cycle.

After disrupting the NFT marketplace sector and ruffling OpenSea’s feathers, Blur now faces a new set of competitors in the NFT lending space.

What do you think? Will Pacman eat up the competition?

Pac-Man (feat. ScHoolboy Q)

Gorillaz, ScHoolboy Q · Song · 2020

🎵 I'm a mad Pac-Man, liiiivin' in a leeeeevelled world

_{Want to get caught up on everything NFTfi? Stay tuned. We’ve written a 3-part NFTfi ecosystem deep dive, to be published in the coming weeks} 😎

🦎 TODAY’S SPONSOR - NATIVE

Native is building crypto’s invisible DEX layer. It turns exchange into a feature any app can add in 1 day, fixing the swap experience for average users and solving token management for project teams.

What does this actually mean? It means that projects now have the tools to create THEIR OWN in-app DEX, allowing them to transact directly with their community! For example, let’s say I was the Founder of NFTitties and I wanted to create my own DEX… let’s call it TittySwap. Would that be possible? Yes, it’s already been done!

So how can you get exposure to Native?

🚨 From May 1st - May 15th, Native is launching a trading competition, where you can earn 1 of 4 tiered NFTs that will play a SIGNIFICANT role in their governance token distribution… 👀

There are two competitions running now, Clash of the Traders, and DEX Duels. To join is simple - participate actively across Native’s social media (Twitter, Telegram and Discord), trade on any of the available DEXes created through Native, or even create your own DEX!

🦎 Visit the Native website for more details.

🚀 SUI HAS ENTERED THE CHAT

Sui mainnet is now live.

Mainnet launch completes a multi-year development process for Mysten Labs, as Sui officially enters the competitive arena of high-performance Layer 1 blockchains.

In this article, we provide a summary of Sui and its launch, with a focus on its technology and tokenomics.

Table of Contents

1. Summary

   1. Background

   2. Tech

   3. Tokenomics

2. Traction and $SUI Performance

   1. Traction

   2. $SUI Performance

3. Final Thoughts

Sui, Summarized

We’ll provide you with the cliff notes summary, but for an in-depth guide, check out Messari’s latest article on Sui, covering the L1 blockchain in great detail.

Diving into Sui (Messari)

Sui is an upcoming Layer-1 smart contract platform with a unique, object-centric data model that is key in its ability to scale network throughput.

messari.io/report/diving-into-sui

Summary

Background

• A brand new L1, Sui aims to offer a highly scalable and secure blockchain.

• Sui’s origins trace back to Facebook’s 2019 Diem Association (prev. Libra Association). Diem shut down in January 2022, but rising from the ashes were two separate blockchains - Aptos and Sui.

• Mysten Labs, founded in 2021 by the former project-leads of Facebook’s digital wallet, was involved in the project from its inception. That December, a16z led Mysten’s $36m Series A. This was followed by an FTX Ventures-led $300m Series B round in September 2022.

  • The Series B round was at a valuation of >$2b.

  • These rounds were limited to the sale of equity, with no $SUI tokens offered.

  • Following FTX’s collapse, Mysten Labs completed a repurchase of FTX’s equity stake for approximately $96m.

• Overall, Sui’s goal is to be a more user and developer-friendly platform that can compete with other high-performance L1s like Solana, Aptos and Sei.

Tech

• Sui delivers a web2-style front-end experience.

• Simple transactions like peer-to-peer transfers and NFT mass mints do not undergo consensus, allowing validators to process ~300,000 transfers/simple transactions per second (in ideal testing environments).

  • Throughput is “horizontally scalable”, meaning network throughput grows as more computing power is added to each validator. This is achieved through sharding and parallel processing, allowing the platform to handle large volumes of transactions without slowing down.

  • Move, Sui’s programming language, has built-in safety properties that prevent certain types of hacks/exploits.

  • Sui uses an object-centric data model that enables efficient handling of complex data structures and supports easy integration with existing data systems. This model is designed to make it easier to write smart contracts as it allows developers to work with objects and relationships rather than raw data.

• Sui uses a Delegated Proof-of-Stake consensus mechanism (DPoS), allowing for fast block times and high transaction throughput while maintaining security.

• To ensure that the network remains scalable, Sui uses a system of programmable transaction blocks (PTBs) to abstract away gas fees and make transactions more affordable. This gas fee model separates computational gas fees from storage fees, and includes a storage fund to incentivize users to free up storage space when it's not being used.

  • Programmable transaction blocks (PTBs) allow developers to define custom gas fees and other parameters for transactions, making it easier to build more complex and efficient applications.

Tokenomics

• Sui has a fixed max supply of 10 billion, with liquidity/vesting schedules yet to be defined.

  • Community Reserve: 50%.

    • The Sui Foundation will control 5 billion $SUI, with the goal of distributing it via community programs.

  • Early Contributors: 20%.

    • 2 billion $SUI to be distributed to Sui’s R&D teams (namely Mysten Labs).

  • Mysten Labs Treasury: 10%

  • Community Access Program and App Testers: 6%

    • Includes a “Recognition Sale” (whitelisted public sale) for early Sui community members (gauged via Discord activity).

    • Includes a General Sale, open to the public.

Unlike rival Aptos, Sui didn’t provide an airdrop.

Traction & $SUI Performance

Traction

The Suit team asserts that more than 200 dApps are set to go live in the coming weeks, spannings NFTs, DeFi, social media and gaming.

With mainnet so fresh, let’s dig into Sui’s “Permanent Testnet” stats.

• Sui Explorer: 117,000 DAU

• Sui Wallet: 1.09 million WAU and an all-time high of 794,000 DAU

• Total transactions: 286.23 million

• Current TPS: ~315

• Total packages published: ~125,949

• Total Validators: 97 (2 by Mysten Labs + 95 by other entities)

• Total stake delegation operations: 7.35 million (Wave 2 Testnet)

$SUI Performance

• Soon after mainnet launch, $SUI was listed on various exchanges including Binance, OKX, Bybit & Kucoin.

• $SUI debuted at around $4.52, but has since experienced a nearly 70% decline settling at around $1.30 at the time of writing.

Final Thoughts

In my opinion, the race for L1 dominance is far from over, and more competition is only a good thing for users and developers alike.

Sui’s mainnet launch comes at a very interesting time, where rising gas fees on Ethereum saw usage of EVM-compatible blockchains hit a new all-time-high last week.

April 25 saw record user activity on EVM-compatible blockchains, as daily new unique addresses hit 6.77 million across L1s including BNB Chain, Polygon and Avalanche. The previous record was 6.74 million in 2021.

This surge has been spurred on by Ethereum’s prohibitive gas fees. According to The Block’s Data Dashboard, gas fees on Ethereum have increased by over 250% since the beginning of the year to around $9 per transaction, up from about $2.50 per transaction in December.

Sui is not EVM-compatible, but Solana showed last bull szn that speculators could care less. Memecoins remain crypto’s leading use-case, and ain’t nobody got time for those gas fees on Ethereum.

🧠 EVERYTHING ELSE

BRC-20, Gitcoin goes woke, OG protocols stay shippin’

🟠 BRC-20 Moons

• BRC-20, the Bitcoin token standard created in early March, went absolutely bananas this week.

• Market cap is currently sitting at ~$278m, a 14x rise over the past week.

• Transaction volume surged to a high of 366k yesterday, overtaking standard BTC transactions on the network

  

  Source: @cryptokoryo Dune Dashboard

🥴 Gitcoin goes woke

In a permissionless industry where identity is largely unknown or irrelevant, Gitcoin goes full retard.

Twitter tweet

As usual, under the guise of benevolent ideology lies a hidden agenda. Blu3dao was granted grifted their way into a free $256k, courtesy of Daphne from blu3dao sitting on the board of grant reviewers 🤡

Twitter tweet

💪 OG protocols stay shippin’

• Uniswap launches Agora, a governance interface for delegates to build profiles & match with other relevant delegates.

• Curve deploys its crvUSD stableceoin on Sepolia testnet. crvUSD uses the Lending-Liquidating AMM Algorithm (LLAMMA).

• Oracle-less perps trading platform GammaSwap is now live on the Goerli testnet.

• Argent launches the Starknet Xplore campaign. Users who complete transactions using Argent X wallet from April 1 to May 9 will receive NFTs as rewards.

Other Interesting Things

• The Ethereum Foundation sells 15,000 ETH

• Balaji settles his $1m BTC bet

• DEI stablecoin hacked

Twitter tweet

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.

@TheRel3ntless_1

🐦 ORANGE FINANCE 

The smart, algorithmic approach to efficient liquidity provision. Orange is an automatic liquidity-management protocol with sophisticated hedging strategies for Uniswap v3 that enables any investor to generate revenues on Uni’s DEX. Basically, this is Uni V3 made simple for everyone.

🐦 DENARII LABS

A protocol-agnostic accelerator powered by HLV and RBV, dedicated to championing and developing the next era of viable web3 ventures. Denarii is dedicated to providing access to tokenomics advisory services, education, mentorship and much more. Denarii is also giving $100k grants to projects accepted to the accelerator program.

📜 Medium Article

🐦 SPARK PROTOCOL

Growth-focused arm of the Maker Protocol. The first product builds upon Aave V3 to bring the best lending market features to Maker.

🐦 ROOT GENESIS

Root Protocol is an Omnichain Governance and Liquidity Aggregation Layer, governed by $ROOT. Root Protocol generates yield by leveraging a multi-token ecosystem, offering various incentives for staking, liquidity provision, and participation in interconnected DeFi services, fostering a sustainable and scalable growth environment.

DEGEN

DYOR, ape at your own risk!

🐦 ARB500: ARB yield aggregator

🐦 zkSTABLE: Decentralized algorithmic stable coin built on zkSync. Transparent and permissionless liquidity protocol to empower DeFi.

🐦 SYPHEX: Anonymous decentralized trading.

🐦 TRISTERO: Building autonomous darkpools. See thread below.

Twitter tweet

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot finds hundreds of projects per week. OG Hunter of the Alpha, Snake Chain, thanklessly sifts through these to provide you with some of the best 🙏

@snake_chain

This week was particularly redacted. 90% was shit like this 😂 

HMMMM

Here’s this weeks’ picks:

🐦 @narativlab - Web3 driven community film funding.

🐦 @michelin3xplore - Official Michelin web3 venture for unique experiences in motorsport, gastronomy, and travel.

🐦 @nocturne_xyz - On-chain privacy for Ethereum.

🐦 @CoinbaseIntExch - Coinbase International Exchange.

🎙 Hunting for Alpha Recap

Loooots of alpha spilled on the pod this week.

🕵️‍♂️ INTELLIGENCE ON CHAIN

In 2022 $1.2 Billion Dollars was stolen from the crypto ecosystem in hacks. In this episode with Intelligence On Chain, the team discusses their detective work in crypto and how everyday users can make their wallets safer while navigating the ecosystem.

🔊 Listen to the full episode now.

Intelligence On Chain - A Safer Crypto Experience

Disclaimer: Nothing discussed on this podcast is or should be construed as financial advice. We may or may not hold investments in any projects appearing on the podcast. Please do your own research.

open.spotify.com/episode/7iI3j969E53EY2tJ4G8pU3?si=a943a7f8a6ad4038

EPISODE SUMMARY

• Intelligence on Chain provides objective research and investigations in the crypto space.

• IOC explains how investigations usually start - understanding where the funds were stolen from and determining how it happened.

• IOC talks about the importance of having a large network and using tools like breadcrumbs.app to track transactions on the blockchain.

• IOC gives a brief overview of the Beanstalk exploit and how they plan to rectify the situation.

• IOC discusses how law enforcement deals work with these types of situations and mentions a few cases they have worked on, including a Binance developer stealing $370,000 worth of bitcoin and the Beanstalk Farms DAO $78m exploit.

• They also mention the challenges of investigating cases that involve Tornado Cash, a tumbler which mixes money with other people's money to obfuscate transactions.

🦎 NATIVE

Next up was Crypto Meina, founder of Native.

The episode contains a discussion of various topics, including Native's role as an invisible DEX layer for the crypto space, the benefits for individuals and protocols (e.g. unlocking new revenue streams), the seamless UI/UX experience, and their flexible market making pricing model. The interview also includes a discussion of Native's partnerships with leading market makers, their community engagement efforts, and plans for the future.

Native is currently running a trading competition to determine governance token allocation 🪂🪂🪂

🔊 Listen to the full episode now. 

Native - The Shopify of DEXs

Disclaimer: Nothing discussed on this podcast is or should be construed as financial advice. We may or may not hold investments in any projects appearing on the podcast. Please do your own research.

open.spotify.com/episode/0vft5MuJsbkKkzGZ8pEzFe?si=577d6af65bbf4454

EPISODE SUMMARY

• Native is the invisible DEX layer for the crypto space.

• Using Native, any project in the web3 space can create their own DEX within five minutes.

• Native combines the capital efficiency of a centralized exchange with the security and decentralization of a DEX.

• With their partner market makers, Native helps projects boost their liquidity.

• Native is the "plumber" of the web3 space, providing fundamental financial infrastructure.

• Native charges no protocol fees to use their services, giving projects the ability to keep 100% of transaction fees.

• Native's seamless UI/UX experience enables projects to optimize user experience.

• Native is constantly exploring new on-chain technologies to integrate into their flexible market making pricing model.

• Native wants to empower the next generation of DEXs, growing together within the web3 space.

 🏹 Community Updates

💪 Community Alpha

Every Monday our community holds a community call to trade alpha and talk shop. These calls are private so details will be omitted, but here are some of the topics discussed this week:

Aggregators > DEXs
Thesis: The reason aggregation wins is because the amount of orders in the DEX space are 80% aggregated. If you’re an LP, you want to be in the pools that get routed. It’s much easier to aggregate than to be a DEX, having to compete constantly and provide liquidity all the time. Aggregators are also more future proof - you can always add the next big Perp DEX.

Will Sui pull a Solana? 
Prediction: Sui might do more of an Aptos - pumps, people FUD and dump, but then realize it’s actually solid and price slowly climbs again. It’s actually quite a good L1, with a nice consensus mechanism.

Will the BTC halving be bullish? Prior to the last one we bottomed out before zooming up. DCA’ing from the end of this dip into majors could be the move, then increase risk tolerance as we move up.

Blur and pacman are super degen.

• Blend is probably going to rek a lot of NFTfi protocols. Still, there will be less risky deals beyond Blur.

• If you want good LTV you need peer-to-peer which is why nftfi.com is doing well, but no-one wants to wait for loan approval. You can’t get good LTV with P2P though, which is why Spice will kill it with their classifier feature.

• Blur can do illegal things with their token that OpenSea just can’t do. This opens speculation and fee sharing with a token. You’re gonna see big threading accounts with Blur bags posting hopium 24/7. They will keep doing that as new products from Blur comes out.

• That speculation keeps them beating OpenSea, and when the normies come back it’s gonna take off. No one is going to write threads about OpenSea because there’s no token to speculate on. Normies will thus hear more about Blur than OpenSea.

• Collections will probably move there too because they can’t collect royalties, and it’s another revenue stream using AMMs.

• Could we see a rotation from meme coins to an NFTfi meta? What will catch a bid? In general, a safe move is probably to just lend. A prologue NFT from Spice, paid out in ETH, is a really good way to get safe exposure.

• There’s always a new meta. Last time it was open edition NFTs, then there was the Owls wave. You’ll see a project do well out of nowhere, then see 4 or 5 derivatives, and it just keeps cycling every week.

• Miladys / Remilios always hopping onto NFTfi protocols early. Blend, nftperp, abacus etc.

And that’s all for this week.

Until next time,

Sending Alpha 🥂

Thanks again to our sponsor Native. Native is crypto’s invisible DEX layer, turning exchange into a feature any app can add in 1 day. See for yourself at native.org.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (Apr 23-30)

BTC $29,197 (+5.4% 7D)
ETH $1,912 (-2.8% 7D)
BTC Dominance 45.9%

… Yeah, I don’t think those numbers paint the full picture.

Here’s how it went down:

After soaring more than 6% intraday on Wednesday, the price of Bitcoin seemingly fell off a cliff. BTC fell 8% from $29,800 to an intra-day low of $27,324 in the span of just one hour.

Initial explanations for the dump were that the market was spooked by an alert from Arkham Intelligence signalling the movement of funds from of Mt. Gox and U.S. Government wallets.

However, that myth was swiftly debunked. Arkham showed that the alerts were sent at 20:07 UTC and 20:08 UTC and therefore could not be responsible for the Bitcoin’s price drop.

So what gives?

A mix of factors likely contributed to BTC’s whipsaw price action this week. The market has been less liquid than usual this week, which it appears some entities are taking advantage of.

A $150M spot bid on Wednesday led to a $1.5B derivatives bid, liquidating the filthy bears and driving price up to a strong price resistance at $30,000. This level is significant, as it represents the point where a large portion of the market recovers above break-even price after nearly a year of being underwater (Michael Saylor included).

The bulls’ bid wasn’t sustained past $30K, and when the spot bid ceased, the show was over and positions were puked. BTC aggregated open interest was cleared from $9.5B to $8B in just one hour, with a total of $350M liquidated within 24 hours.

Stay safe everyone.

Pro tip: Don’t trade LTFs in an uncertain market regime (like this one).

Twitter tweet

Twitter tweet

Twitter tweet

📜 Stories of the Week

haha yeah, livin’ the dream

Here’s the top stories unfolding right now.

🙏 _{I tried to be succinct but DAMN it was a big week}

💀 THE BANKING CRISIS ISN’T OVER… 

It’s only just begun. First Republic is the latest domino to fall.

In case you missed it, there was a crisis among US Regional Banks last month (also known as the banks that are not “too big to fail”). How did we end up in this position?

Well, after the COVID stimmies airdrop these Regional Banks were flooded with excess deposits. Hurrah! Now they just had to choose where to earn yield: investing in treasuries (safu), or making loans (risky). To the dismay of all our weird uncles with terrible business ideas, these banks decided the US Government had less credit-risk (sorry Uncle Joe).

However, with rates near zero, banks needed to juice their yields. They invested in longer-term treasury bonds, taking on greater duration risk for greater returns.

This worked great until it reallyyy didn’t - when J Powell started aggressively hiking interest rates, the value of these bonds plummeted. Banks that were overexposed found themselves sitting on significant unrealized losses, resulting in a liquidity crunch when depositors decided to withdraw their money. First Silvergate experienced this, then came Silicon Valley Bank, and now we find ourselves here (new VC value-add unlocked: blow up your portco’s primary bank by spreading FUD 📈).

Fortunately, the FDIC came to the rescue and guaranteed depositors. Crisis averted, right?

Well, not really. Chances are you have heard something is going on with First Republic right now. If you’re anything like me you may also be wondering… what the fuck is First Republic?

And more importantly… why should I care?

There is some incredible content out there breaking down the larger implications of this situation in detail (links below), but here is my smooth-brain summary:

• The entire US regional banking sector has some variation of similar issues to SVB and Silvergate. The Fed and US Treasury know this, and have used these blow-ups to implement a partial solution to the systemic issues (the Bank Term Funding Program). Oh, and by a partial solution I mean an implicit print of $4.4 trillion (Arthur Hayes’ words not mine).

• This gigantic injection of liquidity was something the Fed already needed to do, but made politically expedient by being able to blame it on crypto (Silvergate) and tech bros (SVB). First Republic is the latest Regional Bank to face the firing squad. What the FDIC will do here remains to be seen.

• With a hole of tens of billions of dollars on First Republic’s Balance Sheet, somebody has to bear the loss. The FDIC really faces three not-so-great choices:

  1. Seize First Republic at a loss and let uninsured depositors take the L, reigniting questions about such deposits at other regional banks;

  2. Seize First Republic at a loss and have the FDIC fill the hole, declaring First Republic systematically important (using its deposit insurance fund to pay off the uninsured depositors), and be accused of bailing out Wall Street;

  3. Or do nothing and let First Republic (and banks in the same position) become unprofitable Zombie Banks indefinitely.

… and THIS is why everyone is paying close attention to First Republic. This is a political decision with widespread consequences. If First Republic fails, and depositors are left holding the bag, this contagion will spread through all Regional Banks facing the same issues. But if the FDIC takes over and Janet Yellen deems First Republic systemically important, it sends a signal that the US Government will back the entire US banking deposit base.

SHEESH 🍿🍿🍿 

If you want to learn more, check out Arthur Hayes’ latest thread (Apr 26), Kaiseki (Arthur Hayes Blog Post), and First Republic is in Limbo (Matt Levine)

🦎 TODAY’S SPONSOR - NATIVE

Native is building crypto’s invisible DEX layer. It turns exchange into a feature any app can add in 1 day, fixing the swap experience for average users and solving token management for project teams.

What does this actually mean? It means that projects now have the tools to create THEIR OWN in-app DEX, allowing them to transact directly with their community! For example, let’s say I was the Founder of NFTitties and I wanted to create my own DEX… let’s call it TittySwap. Would that be possible? Yes, it’s already been done!

So how can you get exposure to Native?

🚨 From May 1st - May 15th, Native is launching a trading competition, where you can earn 1 of 4 tiered NFTs that will play a SIGNIFICANT role in their governance token distribution… 👀

There are two competitions running now, Clash of the Traders, and DEX Duels. To join is simple - participate actively across Native’s social media (Twitter, Telegram and Discord), trade on any of the available DEXes created through Native, or even create your own DEX!

🦎 Visit the Native website for more details.

😳 THE DOLLAR IN DECLINE?

Between the clusterfuck in the US Regional Banking sector, hostility and lack of clarity from regulators, and the squeeze everyday people are feeling from rising inflation, anti-dollar sentiment is at an all-time high.

Foreign nations & crypto powerbrokers alike smell blood, and just about everyone is on the offensive.

The state of things.

Crypto Powerbrokers put on their big boy pants

Raise your hands to the (debt) ceiling!

An ever-skyrocketing fiscal deficit probably isn’t helping sentiment either.

At this rate, the US Treasury is on target to reach the Debt Limit by July.

According to estimates from Goldman Sachs, the US debt limit could be reached as soon as July. h/t @coinbureau

Hitting the debt ceiling is nothing new though, irrespective of who is in power.

Parties come and go, but numba always go up.

Whilst clearly not ideal, this shouldn’t come as a surprise. The reason the debt ceiling increases so often is because the government runs a deficit most years, and to pay off maturing debt they have to constantly issue new debt (wait - isn’t that how a ponzi works? Nevermind).

In my humble opinion, the debt ceiling is just a meme - an arbitrary “limit” on spending that can and will be raised whenever necessary. Since 1960, Congress has raised or suspended the debt ceiling 78 times. Today’s US Federal debt of ~$31 trillion represents a nominal increase of over 5000x since 1917, when it was ~$5.7 billion.

Lyn Alden’s latest newsletter covers this topic in great detail.

Foreign Nations make their move

If you are starting to feel less confident in traditional financial systems, you aren’t alone.

Central banks everywhere share these concerns, as reflected by a historic rise in gold purchases.

Central bank gold purchases spiked by 152% last year - the highest since 1967.

Nothing covered thus far paints a rosy picture for the US dollar, but this following section might be the most damning.

Back in January, investing legend Ray Dalio stated that the dollar global order is ‘fading away’, going on to say:

And that’s exactly what we’re seeing right now. 

Twitter tweet

Twitter tweet

All empires must come to an end, and when a nation’s reserve currency is no longer the preferred global medium exchange or store of wealth, that is historically a pretty good top signal.

In contrast to regulators in the West, in the East regulation appears to be softening, encouraging crypto activity:

• Hong Kong SFC to Issue Crypto Exchange License Guidelines in May

• A Japanese government-affiliated web3 white paper calls for expansion of guidelines related to DAOs, changes to crypto tax regulations, clarification of NFT rights and introduction of start-up visas

Even the EU managed to outpace the United States in providing some regulatory clarity, after European parliament passed the Markets in Crypto Assets (MiCA) regulatory framework.

Perhaps it’s time to start looking at those foreign visas again. Which nation do you think will emerge as the most dominant in crypto?

5 Countries That Will Drive The Next Crypto Bull Run!

@coinbureau

The community is fed up too

Coinbase’s PR campaign appears to be working 🛡

And Gary is still everyone’s favorite whipping boy.

Last week we highlighted the hypocrisy of the SEC naming $ALGO a security despite previously promoting Algorand.

Well, it turns out there’s more dirt to be uncovered still. @ZK_shark went back through the lectures from MIT’s 2018“Blockchain and Money” graduate course and found even more contradictory positions.

In one lecture he clearly expresses that the vast majority of the market are decisively not securities:

Ladies and gentlemen, we live in a clown world 🤡

Regulators gonna regulate

Haters gonna hate, regulators gonna regulate.

• Regulators want to raise the accredited investor regulations to $10m+ in net-worth.

• USDC stablecoin ‘backdoor CBDC’ nixed by NY Fed

• SEC reopens proposed regulations to expand the definition of an exchange, with sights towards greater DeFi Oversight.

Howey test? Howey bout DEEZ NUTS

🧠 EVERYTHING ELSE

Merlin Rug, trending narratives, and other interesting things.

🧙‍♂️ Merlin DEX Rugged by Founders

This was a weird one.

Merlin DEX, supposed to be a Camelot fork on zkSync, was rugged this week by the founding devs shortly after its public sale began for over $1.8m.

What made this a particularly unusual incident is the amount of effort and sophistication that went into pulling it off. This wasn’t just some random unaudited fork that ran away with the funds from a public sale. This project had already raised a seed round from many noteworthy crypto founders and alpha groups, deceived and recruited help from some of these individuals, and had just passed a security audit from CertiK. Despite ALL this, less than a day after the public sale began, the founding developers went rogue and drained the protocol’s liquidity pools.

Atlas (who to be clear, is not at fault here), was recruited at the last minute by the two founders to revamp their janky tokenomics, as well as do BD & marketing. Read his full thread that documents the series of events that led to this situation 🧵

Twitter tweet

Naturally, a lot of people are outraged at CertiK for doing a shoddy audit job. Most of us can’t read code, so we rely on these auditing firms to be up to scratch. Certik addressed the incident in a statement pointing to a “private key management issue” as the cause, but those who checked the code themselves suggest that this was a ridiculous oversight by CertiK.

Twitter tweet

Merlin and CertiK plan to compensate users impacted, and are collaborating with law enforcement to track down the founders if direct negotiation fails.

Just about everyone was fooled by this one. All except for one individual…

From a text AMA we (tried) to hold with the founders

Will he ever get his answer? #JusticeforDogeX

🧙‍♂️ A magician never reveals his secrets.

🔥 Trending Narratives

Memecoins again

Memecoins have been hot for a while now, but we won’t be giving them extra attention for the time being. See why 👇

Twitter tweet

Stay safu.

NFTfi Summer?

👀

Twitter tweet

milady.

Source: Parsec Weekly #27

Liquid Staking

Liquid staking overtook DEXs to become largest category in DeFi 😯

Source: DeFi Llama

So who’s buying?

Interestingly, Lido dominates the portfolios of some of the largest VC funds in the industry:

• Paradigm Capital: holds over $350m of on-chain assets, with roughly 55% in Ethereum and 45% in Lido.

• Dragonfly Capital: holds over $150m on-chain, split roughly between:

  • 30% Lido

  • 30% stablecoins

  • 15% ETH

  • 15% Bitget

  • 5% Frax

  • 5% Ribbon

_{Analysis: 2036 newsletter}

Someone bucking the trend is Arthur Hayes, who dumped his Lido position ahead of Shapella. He outlined his reason for doing so in a recent BitMEX blog post.

Other Interesting Things

• Circle launches cross-chain transfer protocol for USDC

• Everything you need to know about Aave and their GHO stablecoin

• Dune Analytics API is now live for all users

• Apple's 30% Tax Mandate on iOS Is Illegal, Judge Affirms—And That Could Be Good for Crypto, NFTs

• Sui Network to Issue Token Following Exchange Sale; Airdrop Hunters Dismayed

• Voyager Creditors down bad as Binance terminates Asset Purchase Agreement

Twitter tweet

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.

@TheRel3ntless_1

🐦 PSY STABLECOIN

PSY is a stablecoin that will enable high leverage and stable utilities with highly scalable LSD collaterals.

Why does this matter? With the Shanghai upgrades, LSDs are one of the hottest narratives right now. Plus, with recent issues surrounding centralized stablecoins, users are looking for more decentralized options for their stables. We don’t know if an LSD collateralized stable is here to stay, but this is definitely worth paying attention to as the LSD narrative unfolds.

Check out the docs here.

🧵 A thread on PSY:

Twitter tweet

🐦 ARRAY

Array is a Multichain Real Yield Launchpad Integrated DEX & Venture Fund.

They offer access to future IDOs through the minting of their NFT without having to hold their token. They have also partnered with Kromatika and SyncSwap for their integrated DEXs. Very much worth keeping an eye on this project.

🧵 Great thread on Array from Linn:

Twitter tweet

🐦 EQUILIBRIA FI

Equilibria is the first yield booster built on top of the now well-known Pendle Finance protocol. With the impressive gains already seen by users on Pendle, Equilibria is aiming to take those gains to new heights. The team is in close communications with the Pendle team, and this could be an exciting one to watch.

DEGEN

DYOR, ape at your own risk!

🐦 BBQ PARTY: Pool Party and Tomb Finance combo. Investments from UDAO and Alfa DAO.

🐦 ASTERISK FI: (3,3) on zkSync. The DEX wars begin on zkSync.

🐦 NEUTROSWAP: Audited community-driven AMM and Launchpad on EOS EVM blockchain.

🐦 GHAST: “Liquidation-Free Lending Market for $USDC, $ETH, and $BTC Delta-Neutral Vaults.

Leverage to boost your $GLP Yield by 195%”

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot finds hundreds of projects per week. OG Hunter of the Alpha, Snake Chain, thanklessly sifts through these to provide you with some of the best 🙏

@snake_chain

🐦 @rhinestonewtf: Account abstraction

🐦 @EnLight_Fi: LSDfi project building on LayerZero

🐦 @ditto_hq: DeFi native NFT liquidity

🐦 @rainshowerlabs: Undercollateralized lending

🎙 Hunting for Alpha Recap

Last month Artemis interviewed the guys from Yama Finance to discuss their Omnichain Stablecoin, the underlying mechanisms, and how it can be used to facilitate extremely high leverage.

Twitter tweet

Yama Finance - Omnichain Stablecoin facilitating extremely high leverage

In this episode we talk about the mechanisms of Yama, how you can use it for leverage, and what to expect in the coming months.

EPISODE SUMMARY

• YAMA is an omni-chain stablecoin that provides high stablecoin yields with risk-adjusted returns.

• Yama Finance aims to provide the highest leverage out of any stablecoin out there and has very high liquidity relative to market cap.

• They provide zero fee, zero slippage swaps between YAMA and USDC and has a peg-stability module (PSM) that incentivizes liquidity.

• YAMA is omni-chain, meaning it can provide exposure to new chains and bypass any time-locked bridges.

• There are no plans to have a token at the start and the system has been designed in such a way that it can pay out three-digit APRs to borrowers and two-digit APRs to lenders without the need to print a token.

• The team is interested in integrating with lending protocols, GLP-like systems, and betting protocols.

• Yama Finance is bullish on Fuel and Eclipse chains, and are keeping an eye on zkEVM chains like Scroll, and also Sui and Berachain.

• Yama aims to be the leverage layer on top of all the existing protocols that are building on top of GLP.

• They are interested in supporting GLP systems and have already announced a partnership with Arcadeum, a betting protocol on Arbitrum that is built on GLP.

• Yama Finance believes the way forward is to piggyback off USDC liquidity, provide one-to-one swaps to/from USDC, and then build a product that's really good so that there's a chance that in the future it can overtake USDT.

BONUS CONTENT!

While we’re on the subject of Omnichain Stablecoins, our resident duck Ali just penned a brilliant deep-dive on two Omnichain Money Markets projects, Radiant and TapiocaDAO.

🧵 Omnichain Money Markets: TapiocaDAO vs. Radiant:

Twitter tweet

🌐 Check out the full article on our website.

👥 Community Updates

💪 Community Alpha

This community COOKS. Here’s the latest 👩‍🍳

‍😻 VaeVictus from SpiralDAO 

🎁 Spiral DAO airdrop (phase one) is live today!

If you missed it, you can still join for phase two 😄 Check if you’re available 👇

Twitter tweet

📝 Spiral DAO also released a sweet article outlining their vision - check it out!

👨‍💻 Eichenkundiger from abacus.wtf

After months of development, the new version of abacus went live this week 🥳 Right now people are able to borrow against their Lil Pudgys and Remilio Babies, with pools for Miladys, rektguys and honey jar opening tomorrow 💦 

Abacus — Recreation #15

three new pools on sunday.. which equals to more frens

medium.com/abacus-wtf/abacus-recreation-15-20a5faba1b88

🎤 Crypto Meina, founder of Native Finance

This week Native announced the completion of their seed round, successfully raising $2M led by Nomad Capital 🔥 

Twitter tweet

🍯 And last but not least, congrats to Smonkey and the Beras for closing a huge raise of $42.0M (ofc) 🍁

👏👏👏

Twitter tweet

And that’s all for this week.

Until next time,

Sending Alpha 🥂

Thanks again to our sponsor Native. Native is crypto’s invisible DEX layer, turning exchange into a feature any app can add in 1 day. See for yourself at native.org.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}

^{Omnichain Money Markets: TapiocaDAO vs. Radiant.}

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

Today our resident duck Ali gives his unbiased view on TapiocaDAO and Radiant. Who comes out on top? Read on to find out…

TL;DR

• Both Radiant and TapiocaDAO are omnichain money markets that use LayerZero to provide lending and borrowing functionality across chains

• Radiant has been live since July 2022, TapiocaDAO is in beta but tentatively planned to launch late April

• Radiant uses liquidity mining to incentivize user activity - users boost rewards significantly by locking a small amount of $RDNT LP tokens

• TapiocaDAO uses a new model called DAO Share Options, where users must supply USD0, their native stablecoin, in order to receive rewards. These rewards are in the form of weekly call options against $TAP so users can purchase at a discount, providing the protocol with additional liquidity it can own.

📬 Today’s Send

📢 Introduction

If you’re not familiar with this by now, source

I’m bullish on LayerZero (L0) and general messaging as an approach to solving the interoperability problems that have plagued crypto since it’s inception. The infrastructure that something like LayerZero provides would make certain usecases no-brainers - specifically with regards to existing DeFi primitives. Most of the top existing DeFi primitives would become more liquid, rewarding, and useful with L0 integration - in theory at this point it’s just a race to see who is best positioned to take advantage once L0 infrastructure can sufficiently scale. Two protocols have decided to tackle the challenge of creating omnichain money markets via L0, while also introducing new design principles of their own.

The two protocols in question are Radiant and Tapioca DAO. There are a couple of key differences between the two projects - and for now neither can really claim the title of winner in this race. Radiant does have the first-mover advantage under it’s belt, but Tapioca offers novel and promising features that make it just as interesting of a project to watch develop.

Let’s take a closer look at how both of these protocols work and some of the nuances that separate them.

🟢 Radiant

Incentivizing liquidity is always a challenge, so both of these projects have taken novel approaches to create opportunities for liquidity to stick around for the long haul. The Radiant team recognized after a couple months that their current emissions model was unsustainable. Lots of mercenary capital was moving in and out of their pools, the token was too inflationary, and they didn’t believe they could achieve their long term vision given runway concerns with the current model. Radiant v2 was introduced to address these concerns specifically.

$RDNT Emissions

Two cash flow streams contribute to liquidity incentivization on Radiant v2 (like most DeFi protocols!): $RDNT emissions and protocol fees. $RDNT emissions are fairly simple, 54% of the token supply is allocated to protocol incentives, unlocked over a period of 5 years. Users can receive these emissions in two* key ways

1. Vested for 3 months, then claimed in full

   1. *May be claimed early for an exit penalty to receive 10-75% of rewards, scaling linearly with time. 90% of these exit fees are sent to the DAO, 10% are burned

2. Immediately zapped into dLP tokens

Protocol Fees

dLP tokens are part of a new system in v2 to support protocol fee distribution. In v1, protocol fees were initially split equally between RDNT lockers and lenders. The protocol fee split (denominated in tokens of all markets $RDNT offers) in v2 is described as follows:

Twitter tweet

The “lockers” referred to as receiving 60%, are users who lock dLP tokens in excess of 5% of their total deposits in USD terms. So if you lend 100 $DAI, you can only receive the bulk of protocol fees by locking at least $5 worth of dLP. dLP tokens are just approved LP tokens from other DeFi protocols locked on Radiant. The current options include:

• Arbitrum: Balancer 80/20 composition RDNT/ETH LP

• BNB: Pancakeswap 50/50 RDNT/BNB

This makes up the bulk of a user’s rewards when using Radiant, the base market rate without locking dLP is multiples lower than the boosted rate in all markets. Users can also receive a multiplier on protocol fees by locking for longer periods of time, up to a year. dLP positions that fall under the 5% threshold can be disqualified by other users for a bounty to maintain protocol rewards flowing to active users.

Radiant v2 - Summary

In summation, users receive $RDNT emissions and protocol fees in the different assets the protocol supports for using Radiant. It’s easy to see that it’s essentially pointless to deposit in Radiant without also supporting your position with dLP, which creates a clever little loop that allows $RDNT to be more liquid throughout all of DeFi. If the intended goal in the long run is to have protocol fees exceed $RDNT emissions - I don’t know that this model is enough to reach that goal. I do like the way they’re supporting $RDNT liquidity with the dLP mechanism, but beyond that this doesn’t seem to be anything more than a basic lending/borrowing protocol with omnichain support, and we all know how well DeFi tokens have held up since launch. In summation, it’s a slight variation on an existing model - but we’ve come too far for the bar not to be set higher for new protocols.

🟣 TapiocaDAO

Now for the more exciting option. while TapiocaDAO still has yet to launch, I think the components that set it apart will make for a much more interesting case study than most DeFi protocols. Not necessarily better, but their token design and supporting stablecoin will almost certainly break some things and give us some interesting insights in the field of tokenomics. The $TAP token boasts one of the more complex token design systems I’ve seen - I’ll try to break down each specific component. Note that understanding this system requires prerequisite knowledge of a couple of different concepts, so don’t beat yourself up if you don’t understand at first read-through - I’ve included some additional resources at the end to help fill in some gaps and maybe fall down a rabbit hole or 2.

It’s all just NFTs?

Let’s lay out some definitions really quick:

• $TAP - (OFT-20 standard) main token of Tapioca DAO.

• $twTAP - (ONFT-721 standard) Time-Weighted Escrowed TAP. Created when a user escrows TAP for a specific time duration.

  • twAML - Time Weighted Escrowing and Average Magnitude Lock. Flattens decay of $TAP by incentivizing users and the free market to ensure the protocol is constantly offering optimal rewards.

• $oTAP - (ONFT-721 standard) American-style TAP call option. American-style options can be exercised at any time prior to expiry.

• USD0 - (OFT-20 standard) Tapioca DAO’s stablecoin, (could be) the first stable coin to boast omnichain status.

So we’ve got 4 tokens (2 NFTs, 2 fungible), now let’s get into how they all work together. One key thing to keep in mind is that TapiocaDAO is trying to incentivize liquidity without the use of liquidity mining programs. Their approach relies on all (public) tokens being emitted in the form of options instead of liquid or vested tokens.

$TAP Emissions

Liquidity mining incentives can be thought of as a liquidity provider exercising call options against the underlying protocol asset, at a strike price of $0, with no expiry. If this is the case - what happens when a protocol sets an actual strike and expiry for that process?

Isn’t he cute?

Protocol Fees

Protocol fee distribution is fairly straightforward - all protocol fees (and 50% of fees from a DAO owned LP on Uni v3) are distributed to $twTAP owners

There’s also a stablecoin

I’ll try and keep this one brief as it’s a bit more tried. USD0 is a decentralized, multi-collateral, overcollateralized stablecoin. It’s minted via CDPs similar to DAI, except the CDPs are generally against blue-chip assets. Some of the assets mentioned are: ETH, MATIC, AVAX, ETH LSDs, and their respective LP positions. The price on Tapioca is always hard-pegged to $1, so users are incentivized to arbitrage any price differences by selling on the open market when USD0 is above $1 and using it to repay debt positions at a discount when USD0 is below $1. There’s a couple of additional caveats and support systems to help USD0 maintain its peg, but none wildly different from anything that already exists.

In my opinion, this stablecoin is a nice bonus if Tapioca proves to be sufficiently liquid as a protocol, but not something to view as a significant value-add just yet. As a stablecoin I don’t expect it to take even a top 5 spot, but having the omnichain label and having part of Tapioca rewards rely on exposure to USD0 could make for a nice, decentralized, and stable store of value at best (very skeptical on it’s ability to scale to top 5 status though).

🤔 What now?

To be quite honest - I’d heard about all the hype surrounding Radiant for weeks up until I actually took the time to dive in (at which point the token was up something like 15x from the lows). The promise of an existing omnichain money market was really exciting knowing how big of a need something like this is. I was severely disappointed to discover that Radiant is nothing more than a lending protocol with misaligned incentives which has led so many similar siloed protocols to their death in the past. I think people are distracted by the “omnichain” buzzword and the fact that the protocol has been absolutely printing fees as of recent.

Shogun’s lovely Radiant dashboard here

What is Radiant doing that’s different to validate these fees continuing to trend upwards - and to one day exceed $RDNT emissions? V2 was a welcome step forward, but a bet on Radiant is a bet on the team to iterate this product into something special (or a bet on the first omnichain money market) - not at all a bet on what it is now. This is a frustrating thesis for me because despite all we’ve been through as a community with mercenary capital Radiant seems to ignore the core of the actual issue despite having such vast ambitions. In my opinion, barring any large changes to Radiant in v3, we’ll see the same cycle continue where users eventually flock to a better yield source as the price of $RDNT comes back to earth.

The biggest thing I like about TapiocaDAO is a creative attempt to solve the problems with liquidity incentivization that other Defi protocols don’t give enough attention to. I can’t say for sure that the DSO model will be better for creating sticky liquidity or POL for Tapioca, but the system is certainly cued up to do so. The one thing that’s certain about Tapioca is that such an experiment can do no worse than pushing the envelope further with regards to token design systems.

Useful Resources

• R.I.P. Liquidity Mining by TapiocaDAO

• On twAML by TapiocaDAO

• Options basics from Investopedia

• Radiant Docs

• Tapioca Docs

Thankyou for reading our first project deep-dive!

If you enjoyed Ali’s analysis, he co-hosts a new podcast called Exit Liquidity - the show where Ali and Cedo show you how to not be exit liquidity 👇

https://twitter.com/exliquidity

If you’d like to venture even further into the world of Omnichain Stablecoins, check out our episode with Yama Finance 👇

Yama Finance - Omnichain Stablecoin facilitating extremely high leverage

Today’s guest on Hunting for Alpha is the team from Yama Finance.

We spoke about the mechanisms of Yama, how you can use it for leverage and what to expect in the coming months.

Until next time,

Sending Alpha 🥂

_{Hunting Alpha is an exclusive community for the next-gen of alpha hunters. Check out what we’re building here.}

🏹 Welcome to the Hunt.

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

Today marks the first edition of Sending Alpha’s weekly newsletter 🥳❕ Let’s get straight to it.

Alfy’s first day of school 😍

📬 Today’s Send

📈 Market Movements (Apr 13-20)

$28,844 BTC (-6.90% 7D)
$1,926 ETH (-3.22% 7D)
BTC Dominance 47.38%

📜 Stories of the Week

It’s been yet another huge week in crypto land. Here’s the top stories unfolding right now.

1. Shapella’s First Week

2. Regulatory Headwinds

3. Everything Else

   1. The Return of FTX?

   2. Hacks

   3. Chains, dApps and Governance

   4. Narratives gathering steam
      

🌐 SHAPELLA’S FIRST WEEK 

A smooth landing for the upgrade.

For those who’ve been MIA, Ethereum’s Shapella Upgrade went live on April 13, combining changes to Ethereum’s execution layer (Shanghai), consensus layer (Capella), and the Engine API. This upgrade enables stakers to withdraw both their staked ETH and any accrued staking rewards.

Prior to the much-anticipated upgrade, selloff concerns were abound. One week on, how has Shapella unfolded?

Well, it appears that the upgrade itself was a massive success, and so far concerns about mass outflows were overblown.

Immediately after Shapella there was a large outflow of ETH withdrawals, mostly coming from providers of liquid staking options like Lido (25% of ETH withdrawals), Binance, Huobi, and Kraken (whose exit is a result of the SEC’s order to end its staking service). For the rest of the week though, this withdrawal activity significantly slowed, and we actually saw net positive inflows.

Source: Nansen Ethereum Shapella Upgrade Dashboard

Hold off popping the champagne though - today we are seeing another large spike in withdrawals. As you can see in the chart below, this time the majority of withdrawals are for Principal balances, not just Rewards.

Source: @hildobby Dune Analytics Dashboard

The ongoing Shapella withdrawal situation is being well-covered by our peers. For further analysis, I recommend checking out:

_{10 charts that tell the story of Ethereum withdrawals - crv.mktcap.eth (Apr 18)
Review of Ethereum’s ‘Shapella’ Upgrade - Coin Metric’s State of the Network (Apr 18)
Round Tripping - Page One (Apr 19)}

🔐 REGULATORY HEADWINDS

SEC playing aggressive, Gensler in the hot seat, and a new Stablecoin bill.

Ahhhhhh I’m protectinggg 🤡 

On April 18 the SEC charged crypto exchange Bittrex with operating an unregistered securities exchange. Bittrex has announced they will be shutting down its US operations at the end of the April - it’s uncertain whether the agency will continue to take legal action. This lack of regulatory clarity has Brian Armstrong responding that “anything is on the table", including relocating out of the U.S. 😬 

In the same filing, the SEC explicitly called $ALGO a security. Hilariously, Gary once spruced Algorand as a “great technology”. Hopefully none of you listened, as ALGO is down 95% since Gazza’s shill at $100 💀 

In a truly ironic self-own, this clear 3rd party endorsement far exceeds what the FTC requires as needing proper disclosures.

Twitter tweet

_{We would like to take this opportunity to formally go on the record - If we like, tag, or pin your project, it is NOT an endorsement. It was probably Alfy stepping on our keyboard.}

Furthermore, in the April 18 hearing before the House Financial Services Committee, the SEC Chair admitted to having NEVER OWNED CRYPTO, nor having transacted ONCE on-chain! How can you possibly regulate a technology you’ve never even used?? 🤡🤡🤡

When pressed whether he believes ETH is a security or a commodity, Gazza was dodging the questions like he was Neo dodging bullets. Under the pressure however, his responses suggested he does consider it to be a security. Check it out for yourself.

For all this fuckery, Karmic justice has rightly landed Gensler in the hotseat. Warren Davidson (my new hero) GRILLED the SEC Chair irl, advocating he be fired from his post. Davidson was scathing in his condemnation, expressing what many of us feel about the SEC’s unnecessary meddling. Take a moment to enjoy some catharsis, basking in the glory of this roast.

Twitter tweet

Reconvening the next day, Members of the Committee turned their attention towards stablecoins, picking up where they left off on regulation pushed back last year. The draft stablecoin bill is the first major piece of crypto legislation in 2023, which Maxine Waters (D-CA) acknowledges has lawmakers “starting from scratch”.

In the aftermath of UST’s major blowup last year, and the more recent USDC de-peg following the bank run on SVB, the bill proposes a moratorium on stablecoins backed by other cryptocurrencies, a request to study a central bank digital currency (CBDC), as well as providing definitions and requirements for payment stablecoin issuers.

🧠 EVERYTHING ELSE

FTX, hacks, project updates, and hot narratives.

The return of FTX?

Hacks

Twitter tweet

PLEASE STAY SAFU EVERYONE 🙏

Chains, dApps and Governance

Narratives gathering steam

Twitter tweet

Twitter tweet

Twitter tweet

Twitter tweet

Twitter tweet

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Rel3ntless, owner of @DeFiRaiders, shares his top early-stage projects for the week.

@TheRel3ntless_1

Renegade is building on-chain darkpools. An end-to-end encrypted exchange that leverages multi-party computation and zero-knowledge proofs. They’ve raised a seed round that was co-led by Dragonfly and AngelList co-founder Naval Ravikant, who was also an early investor in such companies as Uber, Foursquare, Twitter, and Notion.

🐦 Twitter ; 🟪 Discord ; 🌐 Website

Laso Finance has built a US Dollar-denominated Visa debit card that doesn’t require KYC. They’re brand new, and have issued 137 cards with $246K total volume at time of writing. There’s a 6.8% fee to deposit, but no gas fees or usage fees on the card.

🐦 Twitter ; ✉ Telegram ; 🌐 Website

Permissive Labs is building an account abstraction layer based on EIP 4337 for permission-based authorization on the blockchain that will function similarly to web2 authorization infrastructure. They’ve built a user interface that allows services or users to create permission sets and solicit authorization from users by sending them a URL.

🐦 Twitter ; 🟪 Discord ; 🌐 Website

More Degen plays:

🐦 Cycle Swap: Concentrated liquidity AMM (3,3) on zkSync

🐦 Nitro Finance: DEX & Money Market Fusion

🐦 Knight DAO: Hybrid project on ARB

🐦 Gambit Trade: Decentralized Leverage Trading on zkSync

💎 OnlyAlpha™ Weekly Gems

@snake_chain

Our Alpha Scraping bot finds hundreds of projects per week. OG Hunter of the Alpha, Snake Chain, thanklessly sifts through these to provide you with some of the best 🙏

@mayfairfund: DEX-traded fund perps (long/short narratives)

@0xaconomy: RWA backed dex

@LED_money: Innovative stable coin pegged to the price of energy

@buildonbeam: Merit circles gaming chain built on Avax

👥 Community Updates

📢 Hunting Alpha x Alfa DAO x IMGNai ETHcc event

🥳 We’re excited to announce that Hunting Alpha will be co-hosting a private event at ETHcc Paris, alongside our friends at Alfa DAO and IMGNai.

💪 Community Alpha

🗝 Alpha Key, Founder of Poolsharks Labs:

👀 “arbitrum testnet coming soon”

This was a really cool GIF, trust me. Check out Poolshark Labs 🦈

🐼 Metapanda announces Endangered Labs’ ReGenesis

Twitter tweet

🚬 Vulcan shares his deep-dive research on Trader Joe ($JOE) 👇👇👇

Vulcan Tracker Presentation - $JOE

Trader Joe $JOE (Apr 18th).

Subli drops a new edition of The Optimistic Newsletter, covering everything DeFi on Optimism and the OP Superchain 🔴🔴🔴

The 🔴Optimistic Newsletter #8

As it is CDP season, let’s dive into it:
- Liquid Staking on Optimism
- @EthosReserve project update & Farming strategy
- @QiDaoProtocol project update
- Crypto Market review
- Podcasts: @RevestFinance @NestedFi

🎙 Hunting for Alpha Recap

🐸 Artemis has been a busy frog. With tax season up on us, last week he hosted Crypto Tax Calculator for an enlightening discussion on all things tax, and the week before interviewed Dimitar from IPOR Labs to discuss POWER tokens.

Click below to listen to the full Crypto Tax Calculator episode 👇

Crypto Tax Calculator - All things TAX

In this episode we talk about tax, how different crypto assets (NFTs, Borrowing + Lending etc) are taxed in different countries, and the trends CTC have noticed from the shrewdest investors.

SUMMARY

• Proper tax planning and compliance can help crypto investors avoid potential legal and financial repercussions in the future. Crypto taxation can be complex, and while CTC can provide valuable information and insights, it's important to seek the advice of a tax professional for specific guidance on individual tax situations.
  

• CTC is a valuable tool for investors to accurately calculate their tax liabilities and stay compliant with tax laws. Creating an entity or shell company can also help mitigate tax liabilities.
  

• Jurisdictions such as The Bahamas and Portugal offer tax advantages for crypto investors, but it's important to be aware of exit taxes and other regulations.
  

• Crypto investors should keep accurate records of all trades and transactions, as well as any expenses related to their investments. Even if a token you’re holding has become worthless, it's still important to consider selling it for zero to realize a capital loss.

• CTC offers both a web-based and mobile app version of their tool, with various features including the ability to connect with popular exchanges and generate tax reports. The tool is constantly updated to ensure compliance with changing tax laws and regulations.

POWER Tokens (IPOR) - Cutting edge tokenomics

In this episode we talk about POWER TOKENS - an improvement on the classic veTOKENOMICS that was built for IPOR, and is now open source for other protocols to use.

Click above for the full IPOR episode ☝

SUMMARY

• IPOR is a groundbreaking DeFi protocol that introduces interest rate swaps to the Ethereum platform, enabling users to exchange fixed and variable interest rates on loans. IPOR employs a combination of smart contract expertise and liquidity provision to enable decentralized interest rate swaps, a financial instrument previously limited to TradFi.
  

• The POWER token plays a crucial role in IPOR's protocol by incentivizing liquidity provision and acting as a governance token, promoting long-term stability and success.
  

• Tokenomics plays a vital role in the DeFi ecosystem, with well-designed tokens significantly impacting a protocol's success and the importance of carefully considering incentives and governance structures. The founder advises fellow innovators to be deliberate in their token design and to seek guidance from seasoned token economists to maximize their protocol's chances of success.
  

• The protocol is designed to cater to small and medium-sized retail investors, making it accessible to a broader range of participants in the DeFi ecosystem.

• IPOR is in its early stages, with a wealth of growth opportunities focusing on providing liquidity to credit markets, an area currently underserved in the DeFi space. IPOR's unique approach to providing liquidity to credit markets and its innovative POWER token design make it a DeFi project worth keeping an eye on.

Thankyou for reading the first edition of Sending Alpha!

Here’s to the beginning of a special journey 🥂

Thus Spoke Alfy.

Se