Remember how everyone was launching an alt layer 1 in 2021? Well, we’re seeing the same thing now with ETH Layer 2s.
Base and Mantle just launched. Consensys just launched its zk-rollup LINEA. Binance’s opBNB just went live. Wtf even Debank is launching their own Layer 2.
There will be more ETH Layer 2s than useful Dapps at this rate! The good news? The Layer 2 Battle Royale will only strengthen DeFi in the long run. Let them battle, and we’ll consolidate to the winners.
Here’s what we got today:
- Trending Narratives. Bots, GambleFi, and more!
- Base season is here. Coinbase launched its L2 successfully.
- Around the Web. DeBank Chain testnet is live, THORChain shipped their innovative lending feature, and more.
Here’s your Edge 🗡️!
Research
Top Narratives Now
Even though the markets are choppy, there’s an opportunity if you pay attention to the right narratives.
In crypto, specific “themes” of tokens tend to explode in popularity. Narratives are stories that cause these pumps. You can print profits by being early to these narratives.
A few popular narratives recently include real yield tokens, perpetual dexes, and Arbitrum.
So what’s good now? Here are a few that I’m paying attention to. And as always, I’m just sharing my opinion. None of these are endorsements to purchase.
#1. Telegram bots
The rise of Telegram bots was the story of this summer. Their user-friendly design pulled in a huge crowd. These bots then monetized this influx.
Long before the buzz, we had discussed the narrative on June 8th. And when Crypto Twitter took notice, we covered it again.
UNIBOT is the market leader for this narrative. Other beta plays include Bag,
#2. GambleFi
Degens love to speculate. So, it is no surprise that the crypto projects enabling gambling and speculation have become successful.
Rollbit is a leader. It is a crypto casino that hosts various online games, including slots, table games, game shows, sports bets, and exclusive in-house games. There are starting to be more competitors coming that are more decentralized.
#3. LSDfi
Ethereum provides the best risk-free yield on the internet. Liquid Staking Tokens (LSTs) tokenize that yield. LSDfi projects are protocols that are built on LSTs.
We’ve covered this narrative several times over many different newsletter issues. We even wrote a deep dive into the narrative.
Pendle and Lybra Finance are two market leaders in this sector.
This narrative is fueled by fundamental forces: massive growth of Ethereum staking and the low penetration of LSDfi. So, keep paying attention to this sector, even if CT loses interest in it.
#4. L2 rotation
Layer2s have established themselves as a long-term narrative.
And now, we have L2s-as-service. Devs can easily create a new L2 with OP Stack by typing commands. We are seeing a couple of new L2 announcements every month.
Degens are flocking to all the new decent L2s. Being early on new L2 projects is a way to print profits.
Base and Mantle are two OP Chains that have managed to build an ecosystem surrounding them. And right now, they are the hot new L2s. Linea, a zkEVM from Consensys, just completed their Alpha mainnet launch. opBNB from Binance just launched.
Other narratives to pay attention to:
- Friend.tech (decentralized social network)
- Real World Assets
- Perp Dexes – GMX v2 just launched and a new DYDX is coming
- Meme coins – Bald proved that the appetite is there for degen coins
- and much more.
By the way, if you want an automated to stay on top of narratives, check out this Dune Dashboard by my friend Crypto Koryo.
And as always, doing nothing is a valid strategy. It’s easy to get chopped up in a low liquidity environment – completely ok to chill until the bull market when you’ll compete with guys like your normie cousin.
Announcement
The Best DeFi Training is Back!
Can you believe it? We’re about to hit the one-year mark for Double Your DeFi. In the past two cohorts, we’ve guided hundreds of students on their path to becoming profitable in DeFi.
My friend Dynamo Patrick and I are excited to keep the momentum with our upcoming Cohort #3, in November 2023. We’re committed to continuous improvement and providing our students with the most up-to-date information.
That’s why we’ve been hard at work improving the program based on feedback from our previous students.
Here are a few exciting changes we’ve made:
- An Exclusive Alumni Discord. Join an active discord with several hundred DYD alumni students.
- We’ve improved the Bootcamp week with more actionable pre-reading material and step-by-step guides to help you prepare for the intense live training and research sessions.
- Additional Pre-Recorded Content. The core focus of the program is on our live sessions. We’re going the extra mile to cover other pre-recorded content to give you more information. This will also help streamline our live sessions to focus on harder-hitting content.
- We’re introducing Edgy’s Degen Deep Dive. Edgy will conduct A-Z research on a brand-new protocol. And he’ll do it within 48 hours of the session.
- We are introducing Playbooks. These are complete, current, step-by-step systems designed to give you a specific outcome. We’ll show you over the shoulder how to find gems on DeFiLlama. In another playbook, we’ll reverse engineer who was early to a hot protocol.
- *New Module* Narrative and Catalyst Trading. We have a new module dedicated to trading based on narratives and catalysts.
We’re running an early bird special for the 1st 25 people that sign up. We have around eight spots left to save $300. Use code “earlybirdspecial”.
Save My Spot in Double Your DeFi November 2023
Layer2s
Base Summer is Here…
There is a gold rush happening on Base. Lured by fortunes, degens are bridging over. And it has become a center of DeFi activity.
What is it? Base is an Ethereum L2 powered by OP Stack. It has all the benefits of an OP chain (which was discussed in a previous issue.)
But with an extra superpower: it is backed by Coinbase. Obviously, they nailed the launch. The numbers speak for themselves. Within few days, they’ve already:
- Became the 5th largest L2 by TVL ($233 M).
- The number of unique users has crossed 214k.
- Cumulative fees have reached around 3 million.
What are the secrets to Base’s success?
- #1 Brand. Coinbase is a trusted voice in DeFi. And trust goes a long way in a world of scams. Potentially, they can attract their massive normie audience to DeFi on base.
- #2 Campaign. They launched a successful “On chain summer” campaign. Users can mint NFTs by using different projects on Base.
- #3 Super apps. They are key to attracting users to any ecosystem. Friend.tech was a super app for Base. It allows you to create social tokens that others can then speculate on. These tokens can have utilities too. Right now, it gives you access to a private chatroom.
- #4 Ecosystem Fund. Super apps won’t come out of thin air. They are built by teams. Coinbase has an ecosystem fund. And it incentivized teams to build cool apps on Base.
- #6 The Layer 2 Rotation. In 2021, we saw the L1 rotation game. We saw L1 after L1 pumping. Being early to projects on a new L1 was a winning strategy to make money.
Similar phenomenon is happening with L2s. Now, degens are moving from L2 to L2. Whenever a new L2 is launched, degens are flocking to it. (Especially if they don’t have a token yet.
Base is still a land of opportunity. You can make money by identifying potential successes on Base and being early to them.
But be aware of scams. Don’t rush and ape into losers. Even if you miss this L2, you can catch the next L2. There are many more L2s to come.
Strategy
The 4 Phases of a Bull Market
There are 4 Phases of a Bull market. We’re getting close to Phase 2.
PHASE 1: The Accumulation Phase
This is where we’re at and have been for the past year. The market bottomed out after Terra’s collapse, FTX’s collapse, and the scare of USDC’s depeg. The worst is over (of course, there’s always the possibility of Tether / Binance FUD being true) Prices are boring and choppy.
Big news barely moves prices, such as Paypal’s stablecoin.Right now, there’s no new liquidity entering the system. No volatility. It’s the same 500 degens PVP’ing each other and trying to front-run each other to the next degen narrative.
This is the phase of preparation. Start putting the Chess pieces on the board to make your big moves. Plant your seeds now, and reap them during the bull market.
Action Plan:
- Accumulate good projects. Look for projects that you think will thrive in the upcoming bull market. Projects with product / market fit, competitors’ advantages, the team’s still building, solid roadmap, and sound financial metrics.
- Save some ammo. It’s tempting to ape into so many older projects. They look like a steal because they’re -90% from their all-time highs. Here’s the thing…most of the best performers for the next cycle don’t exist yet. People favor being “early” to something completely new, than buying an older project.
- Don’t Overtrade. Don’t screw yourself over because you were bored and lost everything in Hamster races and Bald. You have to survive first before you can win. Don’t play bad poker hands because you’re bored – wait for the good ones.
- Fill in the Gaps in Your Knowledge. The bull market isn’t for learning. The bull market is for picking money up from the floor. This is the time to be learning. You don’t want to hear about a new protocol building on top of GMX, but you have to spend a week catching up on the basics of GMX during the bull.
- Monitor liquidity. Look for inflows to CEX’s. Look for Stablecoins being deployed. Look for DeFi TVL increasing. Look for the size of the crypto’s overall market cap to increase. More liquidity means things are shifting.
Keep reading for Phase 2, 3, and 4.
🚀 DeFi Catalysts
DeBank launched the testnet for DeBank Chain. It is an L2 based on OP Stack. They are planning to be an asset layer for the Social sector.
opBNB mainnet is now open to infrastructure providers. It is a Layer2 based on OP Stack that settles on to BNB Chain, instead of Ethereum.
THORChain shipped their lending feature. They are innovative since the loans have 0% interest, no liquidations, and no expiration.
Immutable released the testnet of their zkEVM. It will be a dedicated chain for Web3 games.
Ribbon Finance had voted to merge into Aevo. They’ve released details of their phased approach to the merge.
Hedera Hashgraph-based micropayments platform, Dropp, was included as a service provider by FedNow. FedNow is the payment rail built by Fed.
Curve Finance introduced the option to levered borrowing of crvUSD. You can get up to 9x. Be careful cuz the deleverage isn’t here yet.
Sei mainnet is live. It claims to be 10x faster than Solana and can achieve transaction finality in as little as 250 milliseconds.
Yearn Finance is discussing the launch of their v3. It’ll make the latest generation of strategies and vaults permissionlessly deployable.
OlympusDAO is discussing the steps for making it fully autonomous. This comes after the approval of Cooler Loans, which essentially allows it to wind down.
📰 Industry News
Sam Bankman-Fried is put back in Jail. A federal judge revoked his bond last Friday He is facing seven different charges including securities fraud.
EigenLayer will lift the cap for LST restaking on Aug 22 at 7 am PT. Resting will be paused once any LST reaches a milestone of 100k tokens restaked.
Visa introduced an experimental solution to allow users to pay gas fees with their credit cards. It was tested on the Ethereum Goerli testnet.
Coca-Cola launched its “Masterpiece” NFT collection on the Ethereum Layer 2 network Base. This was part of “Onchain Summer” from Base.
Singapore’s Central Bank released its stablecoin regulatory framework. Stablecoin issuers in Singapore will have to meet certain requirements.
