SBF’s trial has begun. And little weird tidbits are starting to come out. Such as his confession to his girlfriend back then that he doesn’t have a soul.
Kinda wish we knew this about him before using FTX!
Here’s what we got today:
- Chainlink’s hot narrative. TradFi’s door to DeFi.
- Evaluation tactics. How to evaluate anon founders?
- Chart of the Week. An analysis of ARB incentive program.
- Around the Web. Su Zhu arrested, FTX trial begins, Pirex $ETH is live on testnet, and more.
Today’s email is brought to you by Zero – the liquidity layer on Polygon zkEVM.
CCIP: TradFi’s Door to DeFi
Chainlink was one of the biggest winners in the early bear cycle. It had a near monopoly on Oracles (they connect smart contracts to real-world data reliably) and a cult-like following called Link Marines.
Despite its fundamentals, the price action hasn’t been the greatest. The token hit an all-time high of $50 and sits at around $7.70 today.
Well, a new initiative from them called CCIP could be a game-changer. Can Chainlink make a comeback?
What is ChainLink? Blockchains don’t have native access to data located outside of their chain. Secure (aka decentralized) systems that provide blockchains access to this data and computation are called “oracle networks.” And ChainLink is the market leader among Oracle networks (with a 47% market share).
What is CCIP? The Cross-Chain Interoperability Protocol is ChainLink’s new protocol. It will offer a simple interface for dApps and banks to conduct cross-chain activities. This way, they can transfer assets and information across blockchains more easily.
But what’s the big deal with CCIP? Well, it’s the TradFi’s door to DeFi.
Why would TradFi join DeFi? Ultimately, they are profit-chasing organizations. They make money by providing financial services to customers. DeFi will provide them with access to a new global customer base and new sources of yield.
Once the full CCIP has been released, City Bank give its users access to yield on the hottest farm across the Base chain without ever leaving the City Bank interface.
But if DeFi has this potential, then …
Why hasn’t TradFi integrated DeFi yet? Because of friction. TradFi has its time-tested processes. Their systems for database management and security concerns. There wasn’t a straightforward way to integrate a blockchain into their system.
With CCIP, this is set to change. They will no longer have to change anything about their current systems. CCIP finally gives banks a simple interface to access DeFi.
Banks will also be able to issue tokens on-chain. Those can be backed by anything: T-bills, real estate, or other real-world assets. On top of that, these tokens will be traded globally.
This is the way that TradFi will enter DeFi. The banks will become a private chain among hundreds of chains. And by becoming the glue that holds them together, the CCIP will capture a ton of value.
This is another brick on the road toward more institutional adoption.
ZERO’s Polygon zkEVM Grant
ZERO is a ve(3,3) DEX that aims to optimize liquidity efficiency for protocols and LPs on Polygon zkEVM – it is a direct fork of the existing Retro project on Polygon POS.
Angle Lab’s Merkl SaaS enables them to integrate multiple Active Liquidity Managers via Zero’s ALM Marketplace for liquidity management, a first in the DeFi space! Some familiar ALM’s are Gamma, Ichi, and DefiEdge (no relation to us).
They recently received a Polygon zkEVM Grant! 👀
The grant includes an incentive distribution with three distinct tiers:
- Tier 1: Bluechip Liquidity Incentives – intended to bootstrap liquidity for blue-chip pools like wMATIC/USDC and wETH/USDC
- Tier 2: Protocols Incentives Match Program – ZERO will coordinate with partner protocols, calculate ROI, and allocate monthly budgets for incentive matches.
- Tier 3: Launchpad Protocol Incentives – providing emerging protocols incentives to allow them to build liquidity on zkEVM
With this grant, ZERO will play a significant step towards Polygon zkEVM’s expansion and diversification as larger players such as Aave, Maker, and Chainlink make their debut on the chain in the coming weeks 🔥
How to Evaluate Anon Founders?
How do you evaluate a protocol’s founder? I can tell you that people get starry-eyed if they see a founder who went to Stanford and is ex-Google.
Well, what if you don’t know anything about them? There’s a trend now that most DeFi founders are anonymous. There could be multiple reasons why. Could it be because they want to maintain their privacy, or do they plan on rug-pulling the protocol within a few weeks?
There’s no such thing as a guarantee. Rather, everything in this space is based on probabilities. So I’m sharing a few things to look at to increase the likelihood of finding a good anon project.
#1 Previous Projects. Just because someone is anonymous doesn’t mean they don’t have a history.
Racer.built the Friend.tech. Before that? He was the lead developer of TweetDAO, one of the first decentralized social media projects. And it was a viral hit before it went downhill.
GMX is another example. It started as the merger of two legit projects, XVIX and Gambit. The integration of old projects is a massive green flag.
#2 Seed investments. Many projects receive investments from VCs or grants from ecosystem funds. If people are interested in investing, there’s a good chance that the founders have already doxxed themselves to the VCs and subsequently passed due diligence. That means the team is probably legit.
Friend.tech is a good example of this as well. Paradigm was one of their seed investors. FT went viral after this news was revealed.
#3 Partnerships. Many projects have partnerships with other reputable projects. Today’s sponsor, ZERO, is such a project. One of the reasons I think they’re legit is their partnership with Uniswap, and they received a grant from Polygon.
GNS is another project from an anonymous founder that I invested in at an early stage. They had partnerships with MakerDAO and Immunefy.
#4 Roadmap/Whitepaper. With experience, you’ll be able to gauge the likely quality of the founders by looking at the project itself. Is their website just a copy of their competitors’? Do they have a whitepaper? Is that written thoughtfully or filled with grammatical errors?
Most successful OG DeFi projects like Aave and Curve had well-written whitepapers. But at the bull market’s peak, many whitepapers would have easily triggered the BS alarm in a two-year-old child.
#5 Community engagement. More followers means more eyes on a project. If there is a really glaring issue, someone will inevitably notice. So, as a community grows in size, the probability of the project being legit increases.
These are just some of the more effective ways to evaluate anon founders. However, it is important to note that a thorough analysis might not always be enough.
So, don’t invest immediately in every project. If you don’t yet feel comfortable with the founders, wait for the project to gain traction. That is a good strategy as well. This way, you can check in to see if the team has been delivering on their roadmap.
$ARB Applications Overview
We’re in a brutal bear market still.
Despite this, the Arbitrum team has announced plans to infuse a substantial $41M stimulus into the Arbitrum ecosystem. A total of 50M $ARB tokens are now earmarked for distribution among qualified projects. The ultimate goal is to channel these tokens to users via various project incentives.
The chart overviews the protocols that requested grants by category and top requestors.
17.6% of applicants are DEXes (although only second in the amount of ARB requested). 11.8% are Perps Protocols.
Most Perps Protocols grants are destined for trading incentives and rebates. Trading is difficult now in choppy markets, and the discount incentives will encourage activity.
Please also be on the lookout for wash trading and fake volume mechanisms put in place!
The highest requests came from protocols including GMX(14M $ARB), MUX Protocol (9M $ARB), and GNS Network (7M $ARB).
If you have been following how the Arbitrum ecosystem has developed since the beginning, you know that many protocols are built explicitly around GMX and GLP. That demonstrates just how much GMX will benefit directly or indirectly from this grant season. The same applies to Gains Network aka GNS.
There are many options now for traders – these incentives could breathe some new life into Arbitrum Perps.
The last seven days of Arbitrum showed a positive net inflow of $127.6M.
People are now flooding to Arbitrum in anticipation of a possible Arbitrum season.
The message is clear: study the possible outcomes that align most with your investing style and look for opportunities. But also pay attention to everything getting incentivized and potential beta plays.
The safer bet is to look at those projects eligible for the grant, like Arbitrum Native, with a unique catalyst and a big enough market cap. Add a lower market cap to the above equation if considering more degen plays.
Also, PlutusDAO was technically eligible for the grant, though they did not apply for the first round. They are suitable for a 750k ARB grant (almost 600k USD at the current price), which could be utilized to re-establish the peg of plsARB (currently 50% below the peg). So, be on the lookout for potential round 2 applications!
I am looking at other strategies and protocols and will closely monitor the future developments of Jones Dao, Umami, and Magpie vaults.
🚀 DeFi Catalysts
Redacted Cartel’s Pirex $ETH is live on Ethereum’s Goerli testnet. It is a step towards their stablecoin, $DINERO, launch.
Radiant has rescheduled its Ethereum mainnet launch to October 15th. some opportunities for significant gas optimizations were made.
Alchemix is voting on their deployment on Arbitrum. Currently, 100% of votes are in favor of the deployment. But, the quorum isn’t filled yet.
Parallax Finance launched “zkSync Era vaults”. It offers users one-click interaction to earn yield via 3 strategy vaults.
Rollbit announced that their RLB Buys & Burns are now entirely on-chain. This adds a bit more transparency about the project.
Tottenham Hotspur launched its own Web3 fan token to drive supporter engagement and rewards.. They’re using Chiliz blockchain for it.
Spark Protocol is discussing onboarding USDC and USDT markets as borrow-only markets. And increasing USDC and USDT markets as borrow-only markets.
Lybra Finance is deciding among three options for the native tokens that failed to upgrade to the new version of its native token $LBR.
Aave is discussing its plan to migrate all Aave systems from Aave Governance v2 to Aave Governance v3. The full migration process will take ~21 days.
Unibot Friend.tech snipers are Live. The 0% FT trading fee is extended.
📰 Industry News
Su Zhu, co-founder of hedge fund Three Arrows Capital, was apprehended in Singapore on last Friday
Caldera introduced the Vienna Network. It is the first-ever instance of a live Optimistic chain powered by a decentralized sequencer.
Valkyrie gets approval for Ether (ETH) futures contracts. They are converting both ETH and BTC futures contracts into one ETF.
Chainlink launched “Data Streams,” a new product to reduce network latency. It is in early access on Arbitrum.
Sam Bankman-Fried‘s criminal trial began yesterday. According to a newly released trial calendar, it can last until November 9.