?Bullpen Brief - 7.15.24?

As we discuss the devaluation of many high FDV/low float projects across the ecosystem with little traction, we wanted to highlight potential solutions to token generation events. Most token launches and the months following the launch are a quick nose dive followed by a slow burn towards zero as early investors, the team, and mercenaries begin to sell. Smac discusses these factors and is now hosting an ideathon in tandem with Asylum Ventures. There are two high-level competing thoughts on how to make token launches more sustainable: either extend vesting periods for more years to optimize alignment and value accrual, or compress vesting periods to find price discovery as quickly as possible. It is exciting to see VCs and investors broadly focus on finding solutions and new norms for how deals are structured on the private side and eventually to the public.

Source: —x.com

? Posts of the Day ?

JD Vance’s portfolio holdings —x.com

Helius is now the 3rd largest validator on Solana —x.com

Helium as the true crypto use case —x.com

Santiago: the most amount of new wealth creation in next decade will most likely come from crypto —x.com

Current market commentary (long-form) —x.com

Pacman on the ‘fee switch’ being seen as far too binary —x.com

Intern on Larry Fink shilling crypto —x.com

$MKR as the most under appreciated token of the cycle —x.com

Market has underpriced that we have both a pro-crypto president and VP —x.com

ETH quickly approaching $3600 pre-ETF on the relief rally —x.com

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? Bullpen Brief - 7.14.24 ?

MakerDAO and its ecosystem continue to be bright spots, anchored by real revenue and traction, in a world with an overabundance of ghost-town infra. With the rollout of their $1B tokenized treasury investment plan drawing interest from BlackRock’s BUIDL fund, Ondo, and Superstate, Maker is clearly leading the on-chain asset shift. As the backbone of Ethereum’s financing economy, Maker’s quarterly revenue has grown quickly as the market has come back to life this year. Maker and $MKR more broadly seem undervalued relative to most other chains; the native savings rate of 8% has exploded Dai’s integrations.

Unlike many newer projects that rely on speculative growth and incentives, MakerDAO's business model seems healthy and sustainable. This has led to over $5 billion in Dai circulating today. The Dai Savings Rate (DSR), offering competitive interest, has further driven adoption, with MakerDAO's quarterly revenue hitting an all-time high of ~$85 million in Q2 2024. MakerDAO's conservative approach has resulted in sound risk management practices, enabling it to capture nearly 40% of all DeFi profits on Ethereum. Additionally, MakerDAO is well-positioned to benefit from Ethena's rise, with Maker offering a $1 billion line of credit through Spark's newly launched Morpho vaults. This strategic move enables Maker to capitalize on Ethena’s tokenized basis trading, which has quickly amassed ~$3.4 billion in AUM, potentially driving significant revenue and further solidifying Maker’s financial dominance.

In the stablecoin market, MakerDAO's Dai has achieved significant dominance. Dai's market cap of over $5 billion makes it the most popular decentralized stablecoin, offering a transparent and stable alternative to fiat-backed options. Dai's deep liquidity and extensive integrations with exchanges, third-party protocols, and off-chain applications have cemented its position. This broad acceptance reduces Dai's cost of capital, making it the most competitive source of on-chain credit. MakerDAO's annual revenue run rate of over $400 million, driven by effective collateral monetization and rising demand for Dai, highlights its market leadership. The ongoing "Endgame" rollout, with innovative products like the Spark SubDAO and enhanced DSR rates, positions MakerDAO to continue its growth trajectory, potentially reaching a $40 billion valuation as it scales its ecosystem. By leveraging Ethena’s lucrative tokenized trading and the proliferation of DAI, MakerDAO stands to accrue substantial value, underscoring its potential to dominate the DeFi sector.

Source: —x.com

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? Bullpen Brief - 7.13.24 ?

Chaotic day today. Stay safe out there ??

Longer-form post coming tomorrow

? Posts of the Day ?

Trump ATH on polymarket after shooting —x.com

Several Trump-inspired memecoins are up —x.com

Senator Lummis on asking direct questions about the attack against the industry —x.com

Yes there is too much infra but paradoxically there isn't enough —x.com

Chain GPD: An interesting metric built by Dynamo DeFi —x.com

I still think the most valuable part of friendtech wasn't the app; it was the underlying smart contract —x.com

Optimistic take on EthCC —x.com

Matt Haung on crypto nihilism on the timeline —x.com

Discussion on if Solana is functionally modular —x.com

Kamino stables earning 20% —x.com

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? Bullpen Brief - 7.7.24 ?

Mason Nystrom and Tina Dai wrote about a new concept they’re calling the “Hot-Start Problem,”. Their main thesis is that the presence of a token limits the window of time a protocol has for exit velocity. Protocols like Jito, MakerDAO, dYdX, Lido, and Helium all utilized tokens as a new financial primitive to bootstrap their network without obfuscating product market fit (PMF).

This discussion is timely because the current token meta is evolving; inorganic growth and the industrialization of mercenary capital for new projects to “bootstrap” liquidity has reached a tipping point. A myriad of different protocols and Layer 2s are experiencing sentiment reversal as their tokens nose dive in price. Many are starting to wonder if airdrops hurt more than they help.

Protocols today attempt to target real users by playing a cat-and-mouse game with endless filters for would-be sybilers. We believe this is misguided. Rewarding users explicitly for work, such as liquidity mining, is cleaner (though fraught with its own set of challenges). Regardless, protocols should either be explicit about capital allocation to improve their protocol or avoid dangling a proverbial carrot in front of their user base. Protocols that treat all pre-token capital as mercenary will likely yield better outcomes in the long run.

The hot start problem is optimal in two scenarios: protocols competing in red ocean markets (markets with a high degree of competition and known organic demand) and products with passive supply-side participation. Applications like perp DEXs are a clear illustration of the hot-start problem in red oceans; there is clear PMF, but the constant battle for liquidity and users is vicious. Tokens and speculation are also helpful for passive supply-side participation like mining on Helium, but the bar is much higher for active networks. Fundamentally, protocols should be useful and productive enough to reach near exit velocity before launching a token, which often can shrink their ability to find organic growth while trying to bootstrap liquidity. Airdrops and LGEs are not a panacea for sustainable growth and liquidity.

Source: —x.com

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? Bullpen Brief - 7.6.24 ?

Happy holiday weekend, long-form out tomorrow!

? Posts of the Day ?

Delphi Digital: Do airdrops hurt more than they help? —x.com

Haseeb (Dragonfly) on timings of token launches —x.com

Steps for L2s before they can be considered fully decentralized —x.com

Berachain explained like your 5 —x.com

SVM stack and infra marketmap —x.com

Most impressive defi youtube channels —x.com

Observations in the current DA landscape —x.com

A list of top 10 L2s by marketcap and their degree of centralization —x.com

Monad is creating real social infra. before launching their technical infra, increasing durability —x.com

ETH at $2800 was clear absorption for smart-money pre-ETF —x.com

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? Bullpen Brief - 7.5.24 ?

Bankless dropped a surprising guest post by arjunnchand discussing Solana’s competitive advantage regarding UX and heavily improved distribution channels. Instead of stepping through several cumbersome steps, sending test-transactions, and bridging; Solana’s actions and blinks create clear developer frameworks bringing crypto directly to any site. Although blinks have been a hotly covered topic, Actions are actually the more exciting building block. Actions on Solana are APIs that enable on-chain transactions to be customized and integrated into various forms like links, QR codes, buttons, and widgets, facilitating seamless interaction with the blockchain from any front-end application. We believe that the proliferation of embedded onchain applications within consumer apps is a major stepping stone to normie usage. Although Blinks are analogous to Farcaster Frames, this characterization largely misses the boat, the entire point is that blinks work everywhere. Although Solana is far from perfect, the ecosystem is shipping and executing a cohesive consumer-focused vision.

Source: —x.com

? Posts of the Day ?

Evaluation of TON and crypto users —x.com

Crypto is NOT inevitable —x.com

Hyperliquid funding rate dashboard —x.com

? Why Jupiter is so bullish for Solana —x.com

Rollup to provide credible education content —x.com

Great diagram on OP stack —x.com

Mt GOX begins repayments —x.com

The german gov, us gov, and mt gox have transferred over $1B since June 19th —x.com

Reasons to be bullish very soon —x.com

Largest liquidation day since FTX collapsed —x.com

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? Bullpen Brief - 6.30.24 ?

The Supreme Court recently struck down the 40-year-old decision in Chevron v. Natural Resources Defense Council(Chevron Deference), severely curtailing the power of federal agencies to arbitrate and enforce ambiguous laws. Generally, the gap of expertise between agencies and specific sectors has accelerated, leading to agencies making decisions with unintended consequences that stifle innovation. The implications of this ruling have largely been glossed over in favor of hand-wavy arguments about the “tide shifting.” The SEC and other federal agencies now have decreased latitude, but what does this actually mean for crypto?

The Chevron doctrine has been cited over 18,000 times, making it one of the most significant cases for technology policy in the US. Instead of giving a ridiculous amount of power to unelected agency staff, it hopefully forces laws to be specific. While taking unchecked power away from Gary is generally positive for the industry, until we have clear legislation around crypto, it is now up to the courts to interpret and clarify ambiguity. Judicial independence is an improvement over a witch-hunt but leaves much to be desired. We think for specific cases like mining, the bull case is clearer, but we believe the fight is far from over.

For one, the strike down’s impact on the Howey Test and the categorization of crypto is dubious, making it more difficult to see the material ways this will improve regulatory clarity leading to a higher win rate. SAB 121 was vetoed, Staked ETH is still considered a security, and the SEC is now attacking the distributor (e.g., Coinbase) instead of individual tokens like the Ripple case. It will be interesting to see how the judiciary handles the interpretation and clarification of crypto regulations in the absence of the Chevron Deference, and whether this will effectively check the SEC's power in the context of the security vs. commodity debate. We do know that legislative leaders will now be crucial in creating clear, specific regulations to guide the industry moving forward.

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*? Bullpen Brief - 6.29.24 ?*

We have an interesting topic out tomorrow, look out!

*? Posts of the Day ?
How to do deep research in crypto—x.comUS district dismissed sec secondary sales of BNB as securities —x.com
Check out the unlayered pod with Hardhat chad —x.comBlackRock’s BUIDL onchain fund continues to growth —x.comEra of sub $200/mo Solana mainnet full-nodes is here—x.comInteresting questions on centralized sequencers —x.comThe Block: Why VCs are so bullish on the TON token—x.comPeople are fed up with amount of new rollups—x.comSEC returns S-1 forms to Ethereum ETF issuers—x.com
DeFi Dojo on arbitrum grants and yields—x.com
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*? Bullpen Brief - 6.28.24 ?*

Just stumbled up Gauntlet’s research on “Optimizing AVS Allocations for Liquid Restaking Tokens"(LRTs)” and found the data interesting. Eigenlayer and other restaking protocols generally have a clear supply, demand imbalance with billions of capital gunning for a few bps of extra AVS yield. The report explores strategies for optimizing AVS allocations for ether.fi, which faces complexity as it manages over $9.3B in commitments across multiple AVSs. It purports how adding additional AVS partnerships can compound risk-adjusted yield and explores the tradeoffs between exclusive partnerships and widespread AVS selection. The analysis emphasizes the importance of balancing capital and operator exposure to mitigate slashing risks and maximize yield accrual. Simulations show varying impacts of additional AVS registrations on average returns and ruin risks, highlighting the sensitivity to slashing probabilities and correlation strengths. Overall, the study provides a framework for making informed AVS allocation decisions based on risk-reward dynamics and operational constraints within the restaking ecosystem.

Source: —gauntlet

*? Posts of the Day ?***
Adam Cochran on consensys suit —x.com

Galaxy research on ETH ETF sizing —x.com

Digital Assets conference held by Goldman: TON, tokenization, etf —x.com

Why solana is beating ethereum right now —x.com

‘Toly on a CEOs job —x.com

? Interesting hyperliquid thread on the team —x.com

SEC sues Consensys, alleging MetaMask is an unregistered securities broker —x.com

Solana over the past couple weeks: 2 sol etfs, zk compression, blinks, smart wallets, 60m startup fund —x.com

JIT auctions are working right now per Drift order —x.com

? Gauntlet’s LRT risk dashboard is now live —x.com

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*? Bullpen Brief - 4.24.24 ?***

Paradigm put out a piece today “Reth’s path to 1 gigagas per second, and beyond” which aims to provide resilience to Ethereum L1, and solve execution layer scaling on Layer 2. The piece builds off of Vitalik’s vision for Ethereum, but first offers an improved metric for performance through a more superior ‘gas per second,’ allowing for futher naunce with the metric capturing both compute and storage costs. Although Reth already surpasses other EVM chains with 100-200mgas/s, the team is quickly looking ahead on immediate steps to achieve 1 gigagas/s through a permutation of vertical and horizontal optimizations (chart above). One of the coolest features of Reth's is its integration of JIT/AOT compilation; Just-in-Time (JIT) compilation converts bytecode into native machine code at runtime, optimizing performance by allowing direct execution at the machine level instead of through an interpreter.

Source: —paradigm

*? Posts of the Day ?***
Bloomberg: “hedge funds are succumbing to mind-boggling returns of memecoins —x.com

? ezETH depeg aftermath explanation (great-charts) —x.com

? Marginfi liquidation incident report —x.com

Google Cloud announces their Web3 portal - experiment on testnets with datasets —x.com

Renzo’s update after community backlash —x.com

Eigenlayer loop that seriously increases smart contract risk —x.com

HK’s $230B Harvest Fund will being trading BTC ETF on April 30th with no fees —x.com

Deribit Insights: global tensions subsiding with vix following —x.com

Base onchain stats: bridge deposits, contract deployment, DAU —x.com

? Auction-based liquidation vs oracle-based liquidation (long-form) —x.com

Samurai wallet founders arrested —x.com

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