I’ve been in Crypto for a while now and I’ve seen some weird stuff. Let’s just say Caitlyn Jenner launching a scam memecoin wasn’t on my bingo card for 2024.
Our industry has been through enough – come on, we at least deserve one of the A-list Kardashians.
In other news, I watched Furiosa: A Mad Max Saga and loved it. Check it out if you want a break from the craziness this weekend.
– Edgy
Here’s what we got today:
- Spot Ethereum ETF. Unpacking the impact of the catalyst.
- The Celebrity Coins meta. Are they good for crypto ecosystem?
- Around the Web. Wallet Analyzer, Solana is stopping the burn, Stepn launched a new app, and more.
Today’s email is brought to you by InceptionLRT — the Restaking SuperdApp.
Here’s your Edge 🗡️!
Spot Ethereum ETF: What It Means
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So, you’ve heard the big news.
On May 23rd, the SEC approved exchange applications for ETH ETFs. It has permitted three exchanges to list and trade eight ETH ETFs:
- Nasdaq. The iShares Ethereum Trust.
- NYSE Arca. The Grayscale Ethereum Trust and Bitwise Ethereum ETF.
- CBOE BZX. The VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF.
There’s a caveat however. The ETFs won’t immediately start to trade on any of those exchanges. There’s a little more bureaucracy left. In fact, it’ll take months before exchanges will actually list these ETFs.
So that’s why the market isn’t going as crazy as some people anticipated.
Still, this is a major catalyst. Let’s look at the impact of this approval:
#1 It legitimizes ETH.
One of the biggest risks to cryptocurrencies is that they might be classed as securities. It’d mean extensive securities laws. And that’ll limit how we can use crypto.
While the SEC hasn’t explicitly stated that Ethereum is a commodity, ETFs are described as “commodity-based trust shares”. So now people don’t have to worry about Ethereum potentially being classified as a security.
This will allow anyone to buy ETH without fear of legal consequences. And that is very important for the mainstream acceptance of crypto.
#2 TradFI investors will be able to invest in Ethereum.
ETFs are the gateway for traditional investors to invest in crypto. And with these ETFs, a significant amount of traditional money will be pumped into ETH bags.
According to Eric Balchunas, ETH ETFs will attract “10-15% of BTC ETF inflows”. In the approximately five months since the BTC ETF launch, 9 BTC ETF issuers (excluding Grayscale) attracted $37.5B in assets under management.
15% of that BTC inflow is $5.6B USD. That’s a lot of new money pumping ETH.
However, converting the Grayscale Ethereum Trust (ETHE) into a spot ETF may lead to some outflow. But the ETH demand should eat up this supply as well.
#3 Tokenomics will pump $ETH harder.
A one-dollar increase in demand for $ETH will pump $ETH comparatively more than $BTC. When compared to Bitcoin, ETH supply is much lower:
- A lot of ETH is staked.
- ETH doesn’t have as much issuance as BTC.
- Ethereum can go deflationary when the activity on Ethereum rises.
- ETH stakers don’t have to sell to stay in business. BTC miners are forced to sell to maintain their business.
- A large chunk of current ETH holders seems to be HODLers rather than traders. So, they won’t sell easily.
Given all these factors, the supply of ETH on exchanges seems to be low. The reduction in supply means an increase in prices.
#4 Boom in Ethereum DeFi.
$ETH is used widely across the whole Ethereum ecosystem. I’m including Ethereum L2s under the Ethereum ecosystem.
An increase in ETH price directly increases the TVL across the entire Ethereum ecosystem. This will cause a wealth effect among these ecosystem participants.
This, in turn, should naturally lead to an increase in the DeFi activity in the Ethereum ecosystem.
Edgy’s take
There seems to be a significant change in politicians’ attitude towards crypto. Republics seem to generally be in favor of crypto. Trump has announced explicit support for crypto. And the current ETF approval appears to have come from political pressure exerted by President Joe Biden’s administration.
Politically, no one wants to be on the wrong side of the crypto community. And if this attitude continues following the election, this is a mega-bullish sign for crypto.
Another point to consider is when the exchange listings will occur. It may take weeks to months. But it does have to happen for the actual money inflows. So, keep that on your radar as well.
So, how to play this catalyst? Some people might say that ETH betas could be a better play:
- ETH L2s. An increase in ETH prices will create a wealth effect on L2s. Leading L2s like $OP or $ARB can be good buys.
- ETH LSDs. Instead of native ETH, many people will opt for ETH LSDs. You can buy their gov tokens as beta plays. LDO and RPL are traditional plays. I might include FXS in that as well. Apart from their staking service, they also have an ETH L2 and stablecoin.
- ETH memecoins. 2024 has been really good for memecoins. If we assume that this trend will continue, Ethereum memecoins may get nice pumps. $PEPE has already crossed ATH.
My opinion? Keep it simple and buy ETH. Attention and inflow goes towards the market leader, and you save a ton of headache.
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WTF are these Celebs doing here?
A new meta is here: celebrity coins.
Several celebrities launched their coins over the past few week.
- It all began when Caitlyn Jenner dropped $JENNER using Pumpdotfun.
- Iggy Azalea, another rapper, launched her token called $MOTHER and started promoting it heavily.
- Using Pumpdotfun, Rapper Rich The Kid also launched his token $RICH. Guess he really wanted to put his money where his name is.
- Davido, one of the top Afrobeats artists, also launched $DAVIDO.
So suddenly, it seems like every F-list celebrity is dropping their own token. Let’s see what’s going on.
Where did this come from?
Memecoins is one of the top-performing sectors of 2024. Celebrity coins are a kind of memecoins. And Pumpdotfi made it really easy for even grandmas to launch memecoins.
It also seems like a single person, Sahil Arora, had contacted these celebrities about launching celebrity tokens. According to CryptoRoxo, he was behind five celebrity coins launched last week.
Once celebrities saw easy money, everyone started launching their own tokens. There are indications that Paris Hilton launching one tomorrow.
Are Celebrity Coins Good?
There’s only a single argument in favor of celebrity coins: adoption.
Celebrities, by definition, have the trust of a lot of people. And so, when they promote crypto, it’ll attract more retail people to our industry. Theoretically, this should help crypto go mainstream.
However…Most celebrity coins are thinly veiled pump and dumps.
- Davido made around $500k in just 11 hours after launching $DAVIDO.
- After $JENNER pumped, Sahil Arora dumped his tokens and made money.
- Bubblemaps revealed the insider activity of Iggy Azalea’s $MOTHER token.
If you need any more evidence, we can look at the list of past celebrity projects and their returns. All of them are practically dead.
Celebrity coins are a way for Z-list celebrities to trade their reputation for some money.
These scams create a very bad reputation for crypto. For many normies, these celebrity projects will be their first step into the cryptoverse. But if they are instantly burned by these pump and dumps, they won’t come back.
Onboarding normies to low-effort scams is very different from actual adoption. If they were genuinely interested in crypto, they wouldn’t be launching their own memecoins. They’ll be:
- Looking into the existing memecoins, buy some, and then talk about it.
- They can promote crypto by just trying to learn about it in public. Asking questions about legit projects will draw attention to them.
- Use crypto protocols. In fact, FriendTech keys make more sense than celebrity coins. At least, users will get access to a chatroom with a celebrity.
Cobie has a useful framework for evaluating celebrity activities in crypto. Apart from reputational risk, are celebrities taking any other risk? This can be putting in a lot of capital, attention, or some other form of energy. Taking risks indicates that they actually believe in the project.
In the celebrity coin meta, celebrities aren’t taking any real risks. So, I’m ignoring this. It’ll be hot for max 2-3 weeks. And then it’ll be forgotten.
Since celebrity participation marked the top in the last cycle, many people are worried if this is the top for this cycle.
No. We still have a long way to mark this cycle top. The actual retail isn’t here yet. Probably, trends like these will just be a step in making the sector popular.
Oh yea if it isn’t obvious by now, stay away from any Celebrity coins.
🚀 DeFi Catalysts
Solana has decided to stop the burning half of the priority fee. 100% of the fees will now go towards validators. This will increase $SOL emissions.
Sandbox, the gaming platform, introduced SandboxDAO. You need 5 $SAND or a plot of land to participate in the DAO.
Kwenta v3 is now fully integrated into its main UI. With this, the v3 on Base will become the default trading experience for users.
Jupiter has decided to allocate 50% of the priority fee earned by Jupiter validator to JupSOL. This will increase the yield for JupSOL.
Ondo Finance has shipped $rUSDY, a new form of $USDY, on the Ethereum mainnet. It is a rebasing token where the yield accrues daily via additional tokens distributed to the holder’s wallet.
Stepn launched Stepn Go. It is a social lifestyle app that rewards your movement and social interactions.
SEI, the parallelized EVM L1, shipped v2 on the mainnet. Users can now use EVM wallets like Metamask to connect to SEI.
MerchantMoe will share 100% of protocol revenue with $MOE stakers. It’ll be distributed in the form of $mETH, Mantle’s LST.
Sanctum, a Solana LST protocol, has launched wifSOL. It’ll distribute the staking rewards as WIF. It’ll be like DCAing into WIF.
Picasso Network has released an implementation of the Interchain Blockchain Communication (IBC) protocol on Solana.
Stargate V2 is officially live. The v2 is much cheaper and capital-efficient.
🪂 Airdrop Alpha
Syrup Finance, a new protocol that provides institutional yield, started their points program called drips.
Taiko has announced their airdrop. 5% will allocated to phase 1. The token claim will begin in six days.
HyperLiquid launched the L1 season of its points program. 700k points will be distributed weekly for 4 months.
Berachain is a highly anticipated chain. Here’s a testnet strategy to farm $BERA airdrop. It’s free to implement.
Shiro has published a thread with a lot of alpha, events, claims, and strategies for airdrops. Check it out here.
🚀 New Launches
Maple Finance launched Syrup, a new protocol that provides institutional yield to the wider DeFi ecosystem.
Dflow launched the beta version of their mobile trading app. It is only available to users who joined the Phase 0 and Phase 1 Preseason rewards programs.
Taiko, a zkEVM L2, mainnet is live on Ethereum. It is a Based Contestable Rollup (BCR). They have a configurable, multi-proof roll-up design.
Astaria went live. It is an oracle-less, intent-based, fixed-rate lending protocol supporting unlimited loan durations for any asset.
Splice Finance is live on Mode Network. It is a yield-trading protocol forked from Pendle. They’ve launched yield markets for LRTs.
Soul Protocol, a LayerZero-based cross-chain lending protocol, went live. It’ll allow users to lend and borrow across platforms like Aave and Compound on various networks.
Velar Artha is live on Bitlayer testnet. It is the first Perp DEX in the Bitcoin ecosystem.
📰 Industry News
EtherFi introduced Cash. It is a mobile wallet + Visa credit card. You can spend money by borrowing USDC against your Ether.fi assets or swap them into USDC.
ENS Labs proposed the ENS V2. They’re re-envisioning the architecture from the ground up. They’ll extend the service to layer2s as well .
Zeta Markets introduced the litepaper for Zeta X. It’ll be a trading-focused DeFi L2 on Solana.
HyperLiquid has enabled permissionless spot deployment. Now anyone will be able to deploy spot assets on HyperLiquid.
Caitlyn Jenner released her own memecoin. And she is claiming to be duped by Sahil Arora. He had done similar launches before.
🐦⬛ X Hits
- Estimation of the Ethereum ETF.
- How to not fumble the bag.
- Mastercard is launching a Crypto service.
- How are users behaving on Airdrops?
- Thoughts about celebs on crypto
