GM.
BTC didn’t reach $1m in 90 days like Balaji predicted. However, he is correct that there are severe issues in the banking system. First Republic collapsed and is the 3rd American bank to fail since March.
Here’s what we got today:
- Key to Narrative trading. An introduction to catalysts.
- Blur released a new product. Now you can use your NFTs as collateral on their platform.
- Balaji settles the $1m bet. Bitcoin didn’t reach its target.
- Around the Web. Coinbase expands, Momoka from Lens Protocol, and more.
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Today’s email is brought to you by zkLend – their mainnet is launching on May 11th.
Here’s your Edge 🗡️!
📉 THE MARKETS
“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton
DeFi Knowledge
💥 An Introduction to Crypto Catalysts
In the stock market, prices pump whenever there’s good news.
- Nvidia’s stock is pumping because of the A.I. boom.
- If Apple actually launched a new product line, AR glasses, that could cause the price to pump.
A catalyst is an event or other news that propels the price of a stock dramatically up or down. An event or an announcement happens, and people get excited about the company’s prospects.
You can apply this same mentality to Crypto. And why you’ll see so many people using the phrase.
Here’s a quick example:
Ethereum’s Merge was completed in September, and the next major upgrade is Shanghai. This is a major catalyst that would increase the usage of Liquid Staking Protocols.
And RocketPool would benefit because of its decentralized nature. What’s interesting is how long people have had the opportunity to accumulate.
You don’t have to buy within 30 seconds of the announcement to make money.
I’m going to share some examples of Crypto catalysts that can move prices.
#1. Expanding to a hot, new chain: GNS was kicking ass on Polygon. Their price exploded once they expanded to Arbitrum. This represented a new market for them. Or TraderJoe expanding to Arbitrum.
Hint: If zkSync picks up traction, I’ll be looking to see which chain expands there.
#2. New products: Introducing a new product can create new use cases and attract a whole new audience. Every protocol trying to issue its own stablecoin is an example. Case and point, Redacted Cartel has just launched their indinero coin. Curve has just deployed their crvUSD coin.
#3. Marketing Partnerships: Fundamentals are important, but people underestimate the attention economy. Coins only go up when other people buy.
Some marketing partnerships can be catalysts. Crypto.com’s CRO token got a nice bump when they announced a partnership with UFC.
#4. Ecosystem incentives. Ecosystem rewards can come in many forms. It can be in the form of Airdrops from underlying chains or grants from governance bodies. For example, Arbitrum airdropped $120m in ARB tokens to several Daos.
These are a few examples. I wrote a cheat sheet on Twitter you can reference.
And here are some action steps to assist:
- Create a list of catalysts. You can use mine as a baseline and expand upon it. Think about real life scenarios.
- Rank the Catalysts. Not all catalysts are created equal. I like using the S, A, B, and C-tier systems to group the.
- Find Catalysts. You can go to protocol roadmaps to find updates. We will help you by incorporating a section in this newsletter each week with some.
- Positioning for Catalysts. You can position yourself early just on rumors alone. Something people underestimate is how inefficient the markets are. The pump can last for a few more days / weeks when something’s announced.
So, the next time you’re scratching your head and wondering which tokens to pick, remember the power of catalysts.
Together With zkLend
zkLend Mainnet Launch Announcement
Welcome back to week three with zkLend, the native money market on Starknet.
zkLend is launching their mainnet on May 11th! In this edition, we’ll talk about use cases, but before that, let’s recap:
- zkLend is built on StarkNet and supported by institutions like Delphi Digital and StarkWare
- They offer a retail permissionless product (Artemis) as well as a permissioned product for institutions (Apollo)
- Starknet is a Layer-2 on Ethereum offering zk-rollup scalability, faster transactions, lower costs, and Ethereum’s security
zkLend is launching their permissionless product on May 11th, enabling any user to deposit, borrow, and lend on Starknet 🔥
But how can you benefit? 🤔
- Liquidity Provisioning: Earn rewards by providing liquidity
- Leveraging: Open leveraged positions by using your assets as collateral to borrow more of the same asset
- Efficient Liquidity Management: Avoid slippage by using your assets as collateral to take a stablecoin loan
- Arbitraging: Use flash loans to bundle all your trades into one transaction and save on transaction fees
There are many more use cases like shorting, collateral swapping, and self-liquidation.
Check out all these use cases on zkLend’s testnet and mark your calendars for the mainnet launch – on May 11th! 👀
Note: Last week’s message announced that the launch would be on May 4th. It has been pushed to May 11th instead.
New Product
🟧 Blur Launches an NFT Lending Platform
Blur, a leading NFT marketplace, has released a new NFT lending platform. It’s called Blend, aka Blur Lending.
This will help unlock liquidity with some NFT collections.
What is Blur? We have talked about Blur before. It is an NFT marketplace that overcame OpenSea’s dominance. You can read more about how they did that here.
What is Blend? It is a peer-to-peer lending protocol for NFTs. Blur built it with Web 3 investment firm Paradigm.
A few already exist, such as Arcade, JPEG, and NFTfi. So how is Blend different? Lending protocols have expiration dates for loans, while the loans in Blur don’t.
How does it work? Blend will match two types of users: lenders and borrowers. Lenders will specify the interest rate and NFT collections they’ll accept as collateral. Borrowers will use their NFTs as collateral to borrow $ETH.
If the borrower wants their NFT back, they can repay it anytime. If the lender wants to increase the rate or stop lending, he can trigger a “refinance auction.”
This will kick off a Dutch auction in the interest space. The winner will pay the old lender his money and take over the loan. If the auction fails, the borrower will be liquidated, and the old lender will take ownership of the collateral.
Buy Now Pay Later (BNPL) is a feature that uses previous primitives. The buyer can get the NFTs by only depositing a percentage of the actual price.
However, the seller will receive the full amount. The remaining money will come from a lender taking the NFT as collateral. The buyer will have to pay back the lender the rest of the money to take full ownership of the NFT.
How is Blend Doing so Far? Within 24 hours, they’ve surpassed $15.6m in loans. There’s definitely a product / market fit.
Go Deeper:
- A Great thread explaining how the protocol works.
- A Dune Analytics Dashboard showing the # of loans and borrowers
Edgy’s Thoughts: I’m a fan of innovation, and this is a smart project. On the other hand, leverage backed by volatile NFTs sounds like a recipe for disaster for the lender. Be careful.
🤝 Million Dollar Marketing Move
Do you remember Balaji’s crazy million-dollar bet? We talked about it in a previous issue.
Let’s recap.
On March 18th, 2023, Balaji bet $1 million dollars that $BTC would cross within 90 days.
While it was insane, he did provide a rationale. The Silicon Valley Bank had collapsed, and there was significant stress on our financial system. According to Balaji’s thesis, this was to lead to a series of bank runs. The Fed was then going to print trillions to save these banks.
This would lead to hyperinflation and the adoption of Bitcoin as the currency, aka hyperbitcoinization.
However, things didn’t pan out that way.
What happened? Balaji and Medlock settled the bet upfront via mutual agreement. Balaji donated 500k each to three parties. The total, $1.5 million, was $500k more than required.
- Bitcoin Core development via Chaincode:
- GiveDirectly, a non-profit organization.
- Medlock, the person who made the bet with Balaji.
I remember thinking it was a great marketing move when the bet happened.
And although he didn’t use the same words, Balaji has confirmed this.
🚀 DeFi Catalysts
This is a new section in the newsletter. We’ll go through various roadmaps and protocol announcements each week and share interesting catalysts.
Curve Finance is set to deploy its stablecoin, crvUSD, on Ethereum mainnet. Note: They found the current version of crvUSD needs a redeployment.
Frax Finance. The first $1m of crvUSD is backed by Frax Finance’s sfrxETH
Optimism mainnet’s upgrade to the Bedrock release is arriving soon. It is a big step in their Superchain vision. The upgrade on the testnet has been running since January.
RocketPool is discussing reducing the $RPL emissions for Oracle DAO members from 15% to 2%. Oracle DAO is a special group of RocketPool nodes that performs some functions that smart contracts can’t achieve.
EigenLayer mainnet is set to launch soon. They will be doing that in stages throughout the year. The first stage is onboarding $ETH stakers.
Fantom might be launching its own Crypto currency-friendly bank. However, this bank probably won’t be available for US citizens.
Avalanche summit is ongoing in Barcelona. Watch out for interesting announcements.
🌎 WHAT’S HAPPENING?
📰 Industry News
Coinbase introduced its international exchange. It will allow institutional users from eligible non-US jurisdictions to trade perpetuals.
Mastercard announced Mastercard Crypto Credential. It will establish a set of common standards and infrastructure to help attest trusted interactions between entities.
Franklin Templeton, a subsidiary of an investment firm with $1.4T in AUM, launched its on-chain money fund on Polygon. They are creating a stablecoin alternative.
Gemini launched its offshore derivatives platform. It will serve around 30 jurisdictions. The messy US regulatory situation might be a factor in this decision.
Southeby launched an on-chain NFT marketplace for secondary art sales. Fully peer-to-peer transactions will be executed on both Ethereum and Polygon chains.
Sui mainnet went live on Wednesday. It was founded by ex-Meta employees. The VC-backed L1 has already crossed $732m in market capitalization.
Lens Protocol has begun beta-testing its Layer 3 scaling solution, Momoka. This follows the Ethereum ecosystem’s trend of using L3s as App chains.
TUSD depegged due to heavy borrowing. It hit $1.20 on Binance when it was supposed to be around $1.00. Criticisms against TUSD’s attestation system are emerging.
Iron Bank hasn’t released the funds to be given to Alpha Homora. The deadline has passed, and Alpha Homora users have begun to take legal action.
Phantom Wallet implemented support for Ethereum and Polygon. They began as a wallet focused on Solana.
🧠 Twitter Alpha
😂 MEME
