Recently we entered a point where VCs place excessive emphasis on the short-term potential FDV of projects, despite typically being locked in and having no prospects of exit for over 3 years. Valuations that seemed unthinkable in the primary market 6 months ago are now seen as
On Bitcoin L2s
When considering Bitcoin Layer 2 solutions, I start with a simplified model focused on three key design decisions:
1. How do you bridge BTC?
2. How and to what extent do you inherit Bitcoin's security?
3. How do you handle the data availability (DA) issue?
1.
@CurveFinance
is the first AMM to introduce the idea of liquidity amplification, positioning itself as the most capital efficient AMM with a niche in stablecoin swap. Besides this, Curve stands out due to its unique user profile. ⬇️
There is no easy way to win or be right. It requires both intellect and character. Intellect to understand the nuances and make the right decision, character to stick with your decisions in times of adversity. I'd argue the latter one is even more important.
We analyze the reasons that could lead to DEX aggregators becoming a synonym for on-chain trading.
Thanks to
@abandeali1
,
@0xfulvia
, and
@theogonella
from
@0xProject
for providing valuable feedback.
A 🧵:
There is no greater opportunity in the crypto-venture market today than trying to disrupt Tether and its $5B AR🥮
@usualmoney
is the only project that has some chance of doing so
The product that can scale to ♾, an incentive structure never seen before, and the team with the
💥Just the beginning! Usual Labs has successfully raised $7M in a strategic funding round and secured $75M in TVL! Get ready for a revolutionary shift where users can own a piece of their fiat-backed stablecoin issuer. Change is here!
#JoinTheAlternative
🔮
Exciting Token 2049 week in Singapore. There is a growing FOMO surrounding Asia with projects placing startegic focus to the East, especially in the midst of regulatory uncertainty in the US.
In addition, deep communities, technical prowess, a vast user base, the largest crypto
Together with
@sui414
, we explore data to check how good
@Uniswap
v3 actually is!
If you were to explain v3 in two words only, it would be capital efficiency. Therefore, we first examine how capital efficient v3 actually is. ⬇
A comparison nobody asked for:
@eigenlayer
vs
@Polkadot
Overlaps:
- modularizing trust and enabling easier innovation at the infra layer
- reducing the cost of capital necessary to launch new blockchains/middleware
Differences:
- uniform vs non-uniform security
- security
Just a few weeks ago Metamask reached a huge milestone breaking $100M revenue in 2021!
Thanks to
@DuneAnalytics
we get to understand the data behind this success. ⬇️
Crypto-founder maturity cycle:
- Newbie: All about tech and research, thinks writing thoughts on X is a waste of time.
- Second-cycle founder: Thought leader on X, spends hours on AMAs, podcasts, and community building.
- Pro: Masters token design, obsessed with listings and
Finally, with the increasing adoption of layer 2s, the subsequent liquidity fragmentation and demand for transferring tokens between layer 2s and layer 1 could be a perfect landscape for further growth of Curve.
Namely, the average Curve user generates above $1.3M volume daily (over the past 30 days), much above any other DEX in the space. For instance, the average Uniswap user generates $23k daily.
🙏
ChainML/Theoriq was our first investment in the crypto x AI space in 2022, during the deep bear market. Seeing a portfolio project reach a significant milestone is one of the most fulfilling experiences as an investor.
@ronbodkin
and the team deserve all the credit; without
Looks good to me!
Nothing provides more validation to a protocol than performance during extreme market downturns such as those of May 19th. Well done
@LiquityProtocol
Why is it so?
Primarily because of the above-mentioned capital efficiency. Thanks to its innovative design, moving prices in Curve is several times harder than in XYK DEXes such as Uniswap or Sushiswap
I thought its public knowledge but seems it isn't
If you deposit ETH as a collateral in Ethena you essentially gave up on the ETH price upside exposure, similar to the action of selling ETH at the market price
If you want to get access to the stablecoin while keeping ETH price
What does makes them different is that moving prices on Curve is much harder and therefore capturing arb opportunity requires large amount of capital, often likely to involve flash loans.
1/14
IMHO the DeFi primary market has been largely uninvestable over roughly the past two years. New projects use incremental innovations to attack established players, focus on too niche areas, or try to become the first to launch already-seen solutions on new L1/L2.
@alice_und_bob
when you negotiate the valuation of a primary market deal it's hard to come up with terms like let's agree on a circulating supply at year 3 post-TGE and value this round accordingly, projects often don't have their token distribution details set in stone (especially in earlier
Sharing some notes on
@InfPools
It introduces the concept of infinite leverage and creates great marketing around it, but what it really is?
"If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck."
⬇️
@myanTokenGeek
@SolvProtocol
imo, Solv is one of the pioneers in the creation of DAO bond market.
some other areas for UL:
- consumer credit (salary streaming platforms might be best positioned to support it)
- margin trading (control assets within escrow wallet to enable liquidations)
Anytime price discrepancy is large enough, an arbitrageur would have to execute large trades to make any price impact on Curve.
Being predominantly driven by arbitrage activity doesn’t make Curve unique, arguably >80% of Sushiswap / Uniswap volumes are driven by arbitrage.
Space & Time as the first decentralized data warehouse is working on a cutting-edge technology.
@chiefbuidl
's and
@holiday_nate
's experience in the data space is nothing short of impressive and we have no doubt in their ability to deliver such a complex task.
1/ Happy to share another opinion piece on
@DefiantNews
, this time exploring the liquid staking vertical and the impact of the recent "Shapella" upgrade.
Although, Curve is focused on stablecoin swaps only, tokens within the same pool could still experience price fluctuation relative to each other e.g. tBTC and renBTC are not necessary 1:1.
1/ In new article, we discuss derivatives DEXs landscape post-FTX crash and dive into design choices that helped
@dYdX
&
@GMX_IO
achieve leading market positions ⬇️🧵
How in the world could simple constant product AMM replace the likes of Binance and Coinbase. Moreover, DEX is so expensive to use. Doomed to failure, right?
Nowadays, the above looks funny. But, only two years ago it was the concern of many.
Templates for tweets right now
1)
{token_name} at {current_price x 10}
Few
2)
Lessons I learned from past bull market and how I plan to 10x my wealth this time
A thread
3)
Let me tell you why SOL is super bullish anon
4)
I accumulated ton of {shitcoin_name} in
2/14
Recently, I’ve been getting more optimistic as some tech solutions that could power next-generation DeFi protocols have been maturing. In the new piece, I discuss the opportunities that could be unlocked with novel data primitives: 🧵
In the following article, I revisit
@pmarca
's 2007 essay, "The only thing that matters", in the context of Web 3.0 investing, and discuss the importance of product-market fit for dApps.
⬇️🧵
Trusted data platforms are incompatible with Web 3.0 vision. Most of the Web 3.0 analytics tools are built as
centralized Web 2.0 businesses.
Even some of the Web 3.0 native solutions have to be
trusted.
Solana marketing - the benefits of being toxic
Solana proved once again that in crypto world prices lead fundamentals and not the other way around.
While suffering one of the largest drops in active ecosystem developers and the amount of stablecoins locked on Solana (among
How much TVL is too much?
Checking TVL turnover can imply how efficiently AMMs are managing their respective TVL. Over the recent period,
@BreederDodo
appears most efficient according to this parameter.
1) gaming - a bunch of Ponzi, money grabs & rug-pulls; most projects didn't raise enough to build quality games; underwriting early-stage games is tough; most gamefi analysts are full of BS; if you are LP in a P2E fund I wonder how you made money in the first place🙂
14) When deployed correctly, modern finance can be breathtaking: seamlessly providing financing to innovative ideas, with the sharpest investors getting paid back a lot in the long term.
When deployed recklessly, it can be breathtaking, I guess, just in a different way.
This is Coinbase's entire suite of products.
Best case: Coinbase becomes the Google or Microsoft of crypto and everyone interacts with their products daily in one way or another
Worst case: 95% of these products get beat by startups that are hyper focused on each category
As discussed in many pieces,
@perpprotocol
is currently the market leader in the derivatives DEX space, primarily because it generates the largest volumes.
Understanding the quality of fundamentals:
Benchmarking projects based on commonly adopted ratios is an easy and fast way of getting a sense of market valuations.
But,⬇️
Congrats on bringing amazing partners onboard!
0x Labs has several projects in their portfolio with a clear product-market fit.
Doubling down in the most recent round has been a straightforward decision for us.
@abandeali1
@willwarren
5) hardware wallets - will become obsolete in a few years. Expect major phones to eventually embed hardware wallets into devices. Also, smart contract wallets will largely remove the need for hardware
As illustrated, v3 can turnover TVL much faster than v2 or
@SushiSwap
, where at peaks $1 TVL provided to v3 translates into more than $1.7 volume daily.
Our decision to invest in
@usualmoney
with
@IOSGVC
lies in the recognition of stablecoins as the biggest frontier in crypto, offering a market cap as expansive as money itself: $80T+. We believe they will master the "mullet" 🧵 👇
@Pierr_Person
@hugosdc
Now that we observed v3 advantages, how about the drawbacks?
V3 inherits the impermanent loss issue, however, the size of the loss depends on the LP behavior. Namely, while in v2 LPs were rather static relative to arbitrage,
As they are optimizing the price for the end-users, we should expect them to send most of the volume to the most competitive venues.
Generally, we observe a tendency where aggregators allocate most of the volume to the latest Uniswap version, implying better pricing.
Consequently, we compare bot activity on v2 vs v3, where more bot activity would imply larger LP losses.
The largest bot alone accounts for 15.5% of the total Uniswap v3 volumes since inception, while the top 5 bots account for roughly 30.5% of total volumes.
@zengjiajun_eth
Applications and primitives that could make existing apps competitive with CeFi alternatives & open up entirely new use cases, for instance:
- optimizing SNARK proofs around specific use cases instead of building general-purpose solutions e.g.
1/
there is a beauty in this. less bs more research. equalized access to opportunities. less luck more skills.
unfortunately not many vcs are ready to adapt
This percentage is arguably even larger as aggregators still do not take into account MEV-generated slippage in their calculation. With the upgrade in the routing logic, slippage-free liquidity sources such as RFQs will capture larger volumes at the expense of AMMs.
the sentiment toward VCs went like this:
1. it's unfair mercenary VCs have exclusive rights to 100x private market deals. let's do a fair launch
2. VCs are fools for investing in primary markets
3. VCs please keep raising money you are important to the industry
It is not hard to imagine a future where a large majority of the manual traders rely on DEX aggregators to execute the transactions, making DEXs a backend that should be focused on capital efficiency while aggregators take care of UX.
This is so, despite aggregators still haven't enabled VIP routing to v3 contracts, indicating that v3 liquidity can be even more competitive than what the current data shows.
@CurveFinance
wars are a result of the good token design and are quite intense recently due to the high price of CRV.
Creating an "entire industry" is rather a success than a "product miss".
Sorry, but Curve wars are dumb.
1) These features should've been built into Curve natively from the start. A product miss has spawned this entire industry.
2) This glosses over Curve losing stablecoin swap mkt share. You're bikeshedding while the shed is burning down behind you
It's time to untether! 🔮 Dive into the journey and paradox of fiat-backed stablecoins.
Read our first article in a series that will unfold over the coming months.
#MoneyAsUsual
This is a significant improvement over v2, which for the same amount of capital generates only about $0.2 volume daily. Capital efficiency indeed is a feature of v3!
5/ Due to compressed returns, capital no longer becomes overly abundant in venture.
Low effort forks on new layer 1s don’t get as easily funded and resultant quality of top quartile venture-backed startups drastically improve.
Yet, when interacting with v3, we frequently get the following message: "Get a better price on v2". Therefore, we check how often v3 beats v2 in terms of pricing.
For this purpose, we check the two largest DEX aggregators
@matchaxyz
and
@1inchNetwork
.