How to take profits

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Here’s what we got today:

• Virtuals updates. Here’s why it’s hot again.
• Profit-taking guide. How to secure your gains?
• Around the web. Pump.fun has enabled revenue sharing with token creators, Superstate is issuing stocks onchain, and more.

Today’s email is brought to you by Stacks — the home of Bitcoin DeFi.

Here’s your Edge !

Protocol Updates

What’s up with Virtuals Protocol?

Virtual Protocol, the flagship project of Agent Narrative, is hot again.

On April 10th, it only had ~300M in Market Cap. Right now, its market capitalization is $1.2 billion.

​Wtf is going on?

Short answer: Virtual has massively improved its fundamentals over the months.

If we’re honest, the pumps in the last AI hype cycle were driven by speculation. People were speculating on the idea of AI agents before they actually worked. It was a cool concept with a lot of potential.

Right now, Virtual has delivered on a lot of the promises. Let’s look at major updates from Virtual.

I first mentioned Virtual Protocol in late October, when its market cap was only around $200M. If you want a comprehensive introduction to the protocol, read my article here.

The TLDR: Virtual Protocol is creating an ecosystem of AI Agents. $VIRTUAL is the currency of the ecosystem. On one side, they enable devs to launch AI Agents. On the other side, they allow investors to get exposure to the agents.

What has changed in the past 4’ish months?

#1. Quality of agents

Back in November 2024, most of the agents were AI Slops. The only relatively good one was AIXBT, which managed to get attention by tweets that sounded useful, even if it wasn’t in reality. The rest of them were just Twitter accounts that posted AI Slops.

Fast forward to now, Agents on Virtual are capable of doing real value-generating activities. Agents like BillyBets and TracyAI are now generating revenue. More varied agents, like media houses and AI trading desks, are under development.

#2. Agent Commerce Protocol (ACP) is live

Agent Commerce Protocol is an open standard for commerce and coordination between agents.

There are many potential challenges in agents coordinating with each other: misinterpretation, hallucination, or missing data. ACP solves this by structuring agent-to-agent transactions with smart contracts

This is a big deal. It allows agents to specialize in their strengths and leverage other agents as required. With this protocol, you can imagine an autonomous hedge fund business composed of information agents, trading agents, and TEE-secured treasury management agents.

You can read more about the protocol here.

#3. Fee structure and creator incentives

When the Virtual Launchpad first launched, AI Agent developers used it because it was the leading launchpad for AI Agents. The only way for them to make money was to sell their token allocation, which is not good for the Agent Token.

Virtual earns trading fees whenever investors trade Agent tokens.

• 70% of trading fees directly go to agent creator wallets
• 30% of trading fees go to Agent Commerce Protocol

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This allows Agent creators to earn without selling their allocation. A reliable system for incentivizing agent builders is great for the ecosystem.

#4. Genesis Launch Method for Agents

One of the biggest problems with the first version of the Virtual Launchpad was the snipers. When a new Agent is listed, they’d instantly buy and concentrate a ton of supply. Others couldn’t buy cause they’d dump on anyone who buys after them. This was a big problem.

Genesis Launch is a different way of launching Agent tokens. It solves the sniper problem and allows the Agent to raise funds for the Liquidity Pool at the same time.

Virgen Points are the core of this system. You can earn them by

• Staking/holding key agents
• Yapping about Virtuals on X
• Participating in Genesis launches
• Trading agents (volume = points)
• Staking $VADER (5% point pool)

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Users can then commit these points to earn the token allocation on new Agents. You can then commit up to 566 $VIRTUAL to potentially secure your maximum allocation. This allows Agent tokens to achieve the best token distribution.

In the initial Agent wave, many people made money in the Virtual trenches. Genesis Launch seems to have made it hot again.

#5. Others

Even when the Agent hype died, the Virtual team has been constantly shipping. They’ve done a lot more than just the above four updates.

Virtuals Protocol has expanded to Solana. But their Solana adoption isn’t that great. Compared to 707 agents on Base, only 37 agents have been able to graduate on Solana.

They’ve also massively improved the Builder support for Agent developers. The Virtuals Partners Network (VPN) unites investors, founders, experts, and academics to support the builders on Virtuals. The team will help devs in every stage of the project, from fundraising to scaling.

At its peak, $VIRTUAL had a market capitalization of $4.6B. But since January, it had crashed alongside the rest of the crypto market. Right now, it’s ~$1.2B. With all the new updates, Virtual will be able to achieve new all-time highs in the right market conditions.

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Guide

Portfolio in green? Here are the best strategies for taking profit.

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The market’s pumping. Our portfolios are green again. Life is good.

But at some point, this party will stop. And when it happens, you should have actual money, not just “screenshot gains.” So, how do you actually take profits?

Well… there are several methods. But today, I want to introduce you to three rule-based systems for profit-taking. In these systems, decisions are guided by objective criteria rather than emotions or subjective judgment.

Let’s dive in.

#1. Dollar cost averaging out of positions.

This one’s simple. Just like dollar-cost averaging into a position, you can DCA out of one.

You sell a fixed amount at regular intervals, regardless of price, to gradually take profits.

In the above example, you are selling a fixed 2k from your position every month. This is a simple strategy suitable for beginners or those who don’t have time for crypto.

You can automate this strategy by setting up DCA systems in DEXes or CEXes. This’ll take emotion out of the equation. It’ll prevent greed (holding too long) and panic (selling too early).

#2. Scaling out strategy

In this method, you gradually close portions of your trade position as the price pumps. Here’s how it’ll work:

• Based on percentage moves in the price, you’ll determine price targets to take profit.
• As each target is reached, you sell a predetermined portion of your holdings. For example, sell 25% of your position when the price pumps 50%. Or you can sell 50% at every 3x. And so on.

A detailed example will be helpful. Imagine you are starting with an initial investment of $10,000 at an asset price of $100. Our “scaling out strategy” is to sell 25% of your remaining position every time the price increases by 50%.

The Image below shows how the above strategy will play out. The black line tracks the token price & the yellow line tracks the position size.

This system allowed you to do many things.

• It reduced risk by selling your position at regular intervals.
• You took $12,715 in profit. Now, even if the price goes to zero, you’re still in profit.
• And you still have an additional $6328 exposure to the project. In case the token moons, you’ll be able to profit from that as well.

For the TDE Pro students, we’ve created an “Exit Strategy” builder that calculates all the relevant numbers for you.

3. Trailing stop loss strategy.

This strategy is designed to protect profits while allowing winning trades to continue gaining value.

Regular stop loss is usually a fixed price point. In contrast, a trailing stop moves automatically with the market price. You can set the trailing stop loss based on percentage moves, volatility/indicator, or time.

I’ll explain the strategy trailing stop loss strategy based on price % moves.

• You initially set a trailing stop at a specified percentage or fixed amount below (for long positions) or above (for short positions) your entry price.
• As the asset’s price moves in your favor, the trailing stop moves along with it, maintaining the set distance.
• If the asset price reverses, the stop-loss remains fixed at its latest level, protecting accumulated gains.

Here’s what’s happening in the above scenario:

• You purchase a stock at $100, setting an initial trailing stop at 10% below ($90).
• As the stock price rises to $150, the trailing stop moves up to $135 (10% below the new high).
• The stock price drops slightly to $142 (still above the stop), and your trailing stop stays fixed at $135, never moving backward. This protects your existing profit.
• The price then climbs to $200, adjusting your trailing stop upward again, now to $180. Even during the pullback to $184, your trailing stop remains at $180.
• When the token hits a peak of $250, the trailing stop moves to $225.
• Finally, when the price reverses and falls below $225, your stop-loss triggers, automatically selling and locking in your profits at $225.

This example clearly shows how you can benefit from upward momentum while protecting accumulated gains by dynamically moving the stop-loss upwards with the price, but never backwards. It’s ideal for trending markets to ride explosive rallies.

The above three are rules-based systems for taking profits.

There are judgment-based systems like the Sentiment-driven (or Contrarian) method and Event driven method. In those systems, we don’t rely on blanket rules. Instead, we adapt to the market conditions using various techniques.

For example, the Contrarian method will use sentiment indicators like X post trends, fear & greed index, as well as tools like Dexu.ai and Kaito to create the profit-taking systems. Even-driven method will create strategies based on specific catalysts.

Now, you might be overwhelmed with all the different methods. For beginners, my recommendation is to use the “Scaling out” strategy. Within TDE Pro, I’ve frameworks to personalize your exit strategies based on your individual context.

The newsletter article isn’t the best format to explain all those frameworks & strategies. In The DeFi Edge Pro, we have a dedicated 6-part, >2-hr course on Profit taking & Cutting Losses. It’ll cover much more area. Like top & bottom signals, templates for easy calculation, and more.

If you wanna join The DeFi Edge Pro, join the waitlist.

 DeFi Catalysts

Pump.fun has enabled revenue sharing with memecoin creators. 50% of the revenue from the trading fee will be given to the token creator.

Superstate announced the Opening Bell. It allows private companies to issue stocks directly on Solana and Ethereum.

Boop.fun introduced a few changes to their value distribution mechanisms. The X airdrop will be split 50% to the creator and 50% to holders of their token.

LayerZero introduced HyperBridge. It allows you to move selected assets from any chain directly into the HyperLiquid chain.

Magpie Protocol is rebranding to Fly. They claim that the new brand is more aligned with their ecosystem and upcoming token, $FLY.

Obol Collective has launched $OBOL. Obol Distributed Validators now secure $1 B+ across many different protocols like Lido, EtherFi, and more.

Alpen Labs is bringing Liquity v2 architecture to its Bitcoin L2. They introduced Bitcoin Dollar, a BTC-backed stablecoin.

 New Launches

Believe.app is a token launchpad on Solana that’s trending. It is gaining mindshare on Crypto Twitter.

Monad has announced the Testnet-2. It’s for validators, not users, and it’ll be an experimental environment for enhancing validator readiness for the mainnet.

Coinbase Wallet is adding Instagram-like social features to its wallet. They released a first look for the “feed” feature to Beta users.

Eterneum, the largest onchain MMO game, is launching its season 1. It’s an onchain battle royale on Starknet.

Industry News

BlackRock filed to allow in-kind redemptions for its Ethereum Trust, enabling direct $ETH buybacks.

Lido Finance got hacked. Lido devs noticed the issue after they lost just 1.4 ETH. And they fixed the issue.

Zerebro founder Jeffy Yu reportedly faked his death. His purpose for the attempt and how he might’ve benefited isn’t fully clear yet.

X Hits

1. State of Bitcoin DeFi.
2. Impact of memecoin meta on the market.
3. Introduction to the technology of Monad, the fastest EVM L1.
4. Dashboard to track the smart account adoption on Ethereum.

Meme

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