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Here’s what we got today:
- Why did BTC crash? Let’s investigate.
- DePIN 101. An introduction to the emerging narrative.
- Rabby vs Metamask. Switching might protect you from losing your Crypto.
- Around the Web. Polygon introduced AggLayer, Synapse released RFQ bridging, ZKP2P integrated with UPI, and more.
Today’s email is brought to you by DeFi Risk Radar — a risk monitor from IntoTheBlock.
Here’s your Edge 🗡️!
What’s up with the prices?
If you checked your portfolios this week, you might’ve had a heart attack.
After the BTC Spot ETP was approved, $BTC peaked at around $ 48.5k. Now, prices have fallen by 19.6% to $ 39k.
What happened? The short answer is that FTX dumped their bags. And reflexivity in the crypto market pushed down prices even more. The legacy of the vegan demon keeps haunting us.
Now, let’s go to the long answer.
The Grayscale Bitcoin Trust (GBTC) was converted to an ETP on January 10th. When other ETPs reduced their fees, GBTC kept their fees high. So, people sold it heavily. Their holdings were 620k before the approval. After the approval, it was reduced to 576k BTC.
FTX contributed up to a third of this selloff. According to Coindesk, FTX sold its entire GBTC holding of 22 million shares (equivalent to almost 20,000 Bitcoin) for around $1 billion USD.
This heavy selling pushed the price downward. And in this phase of the bull market, if BTC prices fall, altcoin prices fall even harder. And so, during this period, many altcoins also went red.
The above is just one theory. If you look closer, you’ll find other explanations as well.
Arthur Hayes, for example, rejects the FTX outflow theory. And according to him, the current drawdown is pointing to a mini-financial crisis in TradFi. For him, BTC price anticipates the end of the Bank Term Funding Program.
So, take these theories with a grain of salt.
Edgy’s take: It looks like we are in a slight downtrend. However, I don’t expect it to be long-term.
You don’t have to care too much about this short-term dip unless you’re a short-term trader. For some numbers, Arthur Hayes is projecting BTC will bottom in the $30k – $35k range.
Spot BTC ETPs are gigabullish for BTC. According to Crypto.com Research, the market had $1.06B positive inflow in the first seven days across the ETPs. And the marketing wars of ETP providers haven’t even started yet.
We are also transitioning into a different phase of the bull market.
I think we are now transitioning from the BTC pumping phase to the ETH season.
So, this isn’t the time to exit the market. Instead, this is the time to accumulate assets you have conviction in.
Introducing IntoTheBlock’s DeFi Risk Radar
The value proposition of DeFi is prominent, but so are the risks – there are technical risks, such as hacks, and economic risks, such as an imbalance in supply/demand dynamics.
The IntoTheBlock team recently published a report titled “Better Risk Management: A Catalyst for DeFi Adoption,” estimating that around $59B was lost from the ecosystem between 2020 and 2023 due to exploits.
We are aware of these risks, but is there a way for us to analyze these risks ourselves? 🤔
The DeFi Risk Radar by IntoTheBlock provides a real-time overview of assets and market conditions, including quantitative risk signals for individual protocols (there are also programmable APIs).
The platform offers different insights for different verticals, for example:
- For AMM protocols – find metrics like slippage or addresses actively arbitraging positions
- For lending protocols – find metrics like liquidations or bad debt accumulation
DYOR and stay safe on-chain – try the DeFi Risk Radar today!
Introduction to DePIN narrative
A new narrative is gaining traction in CT: DePIN.
What does it mean? It stands for Decentralized Physical Infrastructure Network.
Our digital world is created on top of gigantic physical infrastructures: from basic internet connectivity to gigantic server farms. And these are managed by centralized companies like Amazon. DePIN is an alternative to this problem.
DePIN uses crypto incentives to provide decentralized versions of infrastructure services. Users will provide resources like storage space in return for tokens.
The current market cap of DePIN is approximately 12.4 billion. According to Messari, they’re disrupting a $1 trillion industry. So, there’s a lot of potential for DePIN.
Here’s an image of different sectors and projects within the DePIN space.
Let’s look at some projects that stood out to me.
#1 BitTensor. They are enabling decentralized access to Artificial Intelligence models.
In the case of a centralized AI company, a centralized private AI model is responding to all of your inputs. With BitTensor, many different models deployed by the community members respond instead.
They already have different products built on top, such as an AI assistant, ChatBot, and Image Generation tool.
#2 ATOR Network. They are building a global and anonymous routing ecosystem. It’ll be used to preserve online privacy and security.
Their origin story is interesting. TOR (The Onion Router) was established in 2002. However, TOR relay growth stagnated around 2015.
In February 2023, ATOR began incentivizing relays through token rewards and added 2k+ nodes in ten months. But in November 2023, the Tor Foundation banned ATOR nodes (~25% of all relays).
ATOR is going to fork TOR in 2024. They’ll be launching hardware relays and incentivizing node operators with token rewards. Devs will also be able to build performant privacy-centric apps on ATOR.
They aren’t live yet. But I’m waiting for the launch.
#3 Render Network. They are a decentralized GPU provider. Graphic Processing Units have many applications across media, gaming, virtual reality, and more.
Anyone can contribute GPU resources to the Render Network. Customers will buy them using RNDR tokens, which will then be used to pay GPU providers.
Solana is quickly becoming the hub for DePIN projects. Helium was its own chain. They’ve since migrated to Solan. The Render Network was on Ethereum. Now, they’re on Solana.
#4 Wifi Map. They claim their ultimate vision is to bring free access to WiFi to everyone. As of now, they already have a successful app with the following services.
- Built-in VPN.
- Offline maps you can use without data.
- Virtual SIM card that gives access to high-speed internet in specific spots.
- A crowdsourced map of free WiFi with publicly available hotspots anywhere in the world.
They were founded in 2014 as a startup. And they boast big numbers.
- 150 M users.
- 4.5 B hotspots.
- 1 B connections.
- 13 M contributors.
They tokenized themselves in 2023 with $WIFI token. And have introduced many utilities for it. This project is on my radar since it is only 28 million in MC.
#5 Gensyn Protocol. It is a project at the intersection of AI and crypto, which already gives it pumpamental value.
And they have raised $50.6 M from big names such as 16z Crypto, CoinFund, and more. So in this case, AI isn’t just a marketing buzzword.
AI models are built using deep learning. Gensyn is an L1 chain for deep learning computation. It’ll reward people for providing computing and performing ML tasks. The end-users are people who want to get ML tasks done. And they’ll pay for it as well.
As of now, I don’t have any position in this narrative. But the narrative seems to be getting ready to moon. So, keep an eye on this one.
Which is the best crypto wallet?
A good crypto wallet is like a shoes on a hiker.
Comfortable shoes make for an enjoyable journey, but uncomfortable ones make every step a struggle. And Metamask, the most popular wallet in crypto, is really uncomfortable.
Fortunately, there’s a much better alternative: Rabby wallet.
Here’s why:
#1 Security. Rabby has a ton of security features that MetaMask doesn’t have.
- Security check: It’ll screen every transaction before you sign it. And if there are any vulnerabilities, Rabby will alert you.
- Transaction simulation. It’ll help you understand what you are signing. And it’ll show you how your balance will change after you sign.
- Whitelist feature to save addresses. And you can choose to send assets only to whitelisted addresses.
- Revoke approvals from your wallet. If you find out that any contract is compromised, you can immediately revoke access.
#2 Much better multichain experience. MetaMask multi-chain experience is a nightmare. When using a new chain, you have to add them manually. And when you use dApps, you have to switch to different chains manually.
In contrast, the multichain experience in Rabby is much smoother. They’ve already integrated most of the chains. And it’ll automatically switch to the corresponding chain based on the dApp.
#3 Multiple wallet management. Everyone is now hunting airdrops and managing multiple wallets. The user experience of multiple wallets in Rabby is much better than MetaMask.
A common objection many people say is that Rabby isn’t integrated with many dApps. But this is a misunderstanding.
Rabby will work with any dApp that works with MetaMask. The “Connect with MetaMask” button can also be used to connect to Rabby.
And on January 23rd, they introduced a points system as well. Aka there’s a possible airdrop.
So now you can potentially make money by just using the wallet.
If you’re interested, use my referral link to get even more points.
🚀 DeFi Catalysts
MagPie announced EigenPie. It will offer Isolated Liquid Restaking Tokens that leverages EigenLayer for Restaking.
GammaSwap introduced DeltaSwap. It is the first decentralized exchange that doesn’t charge a fee.
UMA Protocol introduced Oval. It lets lending protocols capture Oracle Extractable Value by auctioning the right to liquidate positions.
SushiSwap now allows users to stake their SUSHI tokens in exchange for xSUSHI, which will get a portion of the platform’s trading fees.
Sturdy Finance released their v2. It is built on Yearn v3. And has over 800k in incentives right now.
CoWSwap has decided to experiment with fees for six months. It will take 50% of the surplus generated on trades.
Synapse Protocol released RFQ Bridging. In this system, relayers will compete to give bridge users the fastest time and cheapest price.
Gnosis DAO is voting on onboarding Centrifuge Prime. It’ll allow them to invest part of the treasury into Real-world assets.
Aevo has migrated to using Celestia for their Data Availability. According to them, this will reduce their costs by 100x.
Umami DAO introduced GM vaults. It is a permissionless, single-sided, auto LP strategy that is built on top of GMX.
📰 Industry News
ZKP2P has integrated with UPI, India’s payment network. Users can now swap P2P between INR and USDC without any intermediaries.
Arkham Inelligence claims to have found BTC addresses for ETPs of Blackrock, Fidelity, Bitwise, and Franklin Templeton.
Polygon said AggLayer v1 will come in February. It will synthesize the benefits of both modular and monolithic blockchains.
Scroll unveiled its multi-proof system. Having multiple provers will increase the security of the rollup.
Cool Cats is building a mobile game on Immutable called Match Quest. The game will make use of Immutable Passport.
Cosmos Hub rejected the proposal to reduce minimum ATOM inflation to zero under certain conditions. The primary reason was security concerns.
🧠 Twitter Alpha
- How to get a job in crypto?
- A long-term strategy for Cosmos Hub.
- Galaxy Research’s predictions for 2024.
- Visualization of daily stablecoin volume since the last cycle.
- Big picture on narrative rotation and where we are now.
😂 Meme
