Round Tripping
as always, thanks for reading and follow me here
tl;dr: SUDO token & NFT liquidity, Arbitrum’s Nitro & coming L2 rotation games, slew of protocol updates, examining DeFi stablecoins, & macro spoiling several breakouts
BTC dominance 37% | ETH dominance 18.5% | DeFi TVL $59B |
Total Crypto Market Cap $1.02T | Stablecoin Supply $153B |
Market Overview
While there has been obvious sectors of the market that have continued their recent outpeformance, the broad market has been contained to its recent range in chop city. ETH continued its growing strength this week ahead of the merge, but the crypto market’s correlation to legacy indexes has prevented it from pushing upwards. ETH, ATOM and the Cosmos ecosystem, LINK, LDO, and several other tokens have routinely shown they’re ready for another leg upwards before exhausting short term rallies and rolling over with legacy markets and macro impacting headlines.
The big news of the week was Arbitrum completing their Nitro upgrade along with confirmation of the SUDO token that will govern the sudoswap NFT marketplace upon distribution. Arbitrum’s Odyssey will soon resume igniting a flow of liquidity rotating throughout the Arbi protocol ecosystem, although that may come on the other side of a successful ETH merge. Speaking of the merge, we’re now 10ish days away from one of the biggest events in the history of crypto. As I outlined in the below tweet, there are numerous crypto specific catalysts on the horizon in September and beyond. As with the Arbitrum Odyssey, many protocols and teams may elect to wait for updates and announcements until confirmation of a successful merge which would create a flurry of rotations and activity potentially spark a short-term bull run with a ton of opportunities for profit in the second half of September.
With the merge and macro uncertainity hanging over the market, the most likely profits, in my opinion, reside in the Cosmos ecosystem ahead of their conference and tokenomics upgrade along with protocols in Arbitrum’s ecosystem. As I wrote previously, reviewing Optimism’s previous distribution of tokens and incentives would give market participants the clearest idea of how to play Arbitrum’s Odyssey and future deployment of the ARBI token. Further, extrapolating, observing, and applying those strategies to upcoming L2s such as Metis, zkSync, and StarkWare are good bets in the coming months. Here’s to hoping for a successful merge and macro conditions to cooperate.
XMON, SUDO, & NFT Liquidity
While NFT volume has undoubtedly fallen off a cliff, the innovation in the space continues. One of the most important developments since the creation of the NFT ERC-721 standard is sudoswap which launched in July. Sudoswap is a decentralized, concentrated liquidity AMM for NFTs which since launch, and evidenced through Dune dashboard screenshot below, has consistently eaten into OpenSea’s monopoly on NFT volume.
Sudo has accomplished this royalty free NFT transactions and a small 0.5% fee on transactions compared to OpenSea’s average 5% royalty and 2.5% take rate. The decentralization of sudoswap through a governance token was always rumored and implied until confirmation came Thursday night. As you can see below, XMON token holders are one of the biggest beneficiaries of the upcoming SUDO distribution which resulted in the green monster coin rallying 20% this week.
Sudo’s success hasn’t come without controversy as there have been numerous debates throughout the ecosystem regarding sudo’s decision to remove royalties and its impact on creators. Ultimately, royalties and take rate were going to trend to zero or close to it as the scale and scope of NFTs impact expanded. Not only has SUDO accelerated that outcome, but the UNI v3 like protocol for NFTs has highlighted the important distinction of the inherent fungibility of non-fungible assets.
Broadly speaking, data across industries, whether it be NFL team defensive rankings or NFT pricing across collections, matters most at the extremes. SUDO has brought this realization to NFTs as the 1076th ranked rarity is functionally the same as they 8934th in the same way that the distinction between the 11th best NFL offense and the 25th best offense could be separated by ~28 total yards per game, which is trivial in the grand scheme of things. Extrapolating that example to NFT collection sizes of 10k, 20k, and 100k+ as NFTs eventually reach mainstream adoption and impact highlights the necessity of Sudoswap and the liquidity it provides. Ultimately, the scale with which NFTs have grown is minuscule compared to their potential and the need for NFT liquidity as the space 100x’s is clear.
funding:
Limit Break, behind DigiDaigaku NFTs & building crypto game, raises $200M
Alexis Ohanian’s Seven Seven Six fund is raising $177.6M for token investments
Filings for DBA Crypto indicate former Galaxy Digital and Genesis executives are raising $500M for a new crypto fund
Animoca Brands continues funding push, adds another $100M led by Temasek
Proof Collective, creators of NFTs Moonbirds & PROOF passes raises $50M
BITLEVEX, Estonia-based crypto options trading platform, raises $50M
Xterio, blockchain gaming platform, raises $40M
Stacked, creator-owned live streaming protocol, raises $13M
RedStone, oracle platform connecting chains to real-world data, raises $7M
Koop, consumer based NFT engagement platform, raises $5M
Sei Network, L1 optimized for DeFi and trading, raises $5M
news:
Meta launches full-service, in-app support for NFT verification and display shown natively within Facebook and Instagram
Ticketmaster partners with FLOW blockchain to distribute tickets as NFTs for select events — pilot program saw 5M+ tickets minted over 6 months
Fireblocks, institutional infrastructure provider, launches support for Solana DeFi, games, and NFTs
Blackrock to use Kraken’s CF Benchmarks BTC index pricing product
DefiLlama launches embedded protocol search functions into their site to limit scams, phishing attacks, and fake promoted Google search protocols
OpenSea committed to only supporting ETH PoS NFTs after the merge
tokens & protocols:
Arbitrum (token soon) completes Nitro migration upgrade, reducing transaction costs further, while increasing speed and scalability of the optimistic rollup
Helium (HNT) proposes HIP-70 which would result in migrating the Helium ecosystem to Solana for increased scalability
Layer 2 zk scaling solution Immutable X (IMX) launches staking rewards program along with outlining their plan for creating a sustainable flywheel
Kain proposes to end Synthetix (SNX) inflation and cap supply at 300M
Tsunami DEX launched on SOL offering zero-fee swapping and integrates payment for order flow (PFOF) protocol DFlow
Kamino Finance, composable liquidity destination and management, live on SOL
Socios backed Chiliz (CHZ) blockchain soccer fan token platform extends partnerships throughout Argentina
CRV founder says “possible” that CRV’s stablecoin launches in September
Binance Chain (BNB) launches liquid staking solutions
Berachain — good thread and info on the coming L1 and associated tokens
LOOKS launches NFT Quicklook showing trait counts, rarest trait, floor price of each trait, and trait with the highest floor natively inside their marketplace
APE — new Otherside trailer released with the story continuing “later this Q4”
LayerZero, (STG developers), expand omnichain messaging standard to Moonbeam Network
Specular, first EVM-native optimistic rollup, announced
reading:
“The Great Convergence: $GHO and the Story of the Five Old Kings“ — Luca Prosperi
“DeFi has pitched itself as a more efficient distribution layer for the allocation and transfer of resources, and it is entirely understandable that such layer has been massively dollarised over the years. People do indeed use DeFi to transfer and store their dollar wealth, and that’s a good thing…the competitive landscape of tomorrow might look way messier and more aggressive than what it is today, with a contracting effect on protocol margins and revenue.“
A timely piece from Luca is top of my mind this week as he examines current and future stablecoin landscape ahead of upcoming stablecoins from CRV and AAVE. The subtitle of the post eloquently summarizes why DeFi protocols are introducing stablecoins saying, “minting currency is great and everyone wants a piece of it”. AAVE, LDO, CRV, and MKR are the past, present, and future bedrock of the DeFi ecosystem and familiarizing yourself with their motivations and products is paramount as DeFi protocols increasingly expand their products to capture users.
around the ecosystem:
Ansem outlines his extremely informative September monthly plan
Framework Ventures open-sources compensation data of portfolio companies
Zack Voell details everything surrounding BTC mining developments in August
Degen Sensei on all things Arbitrum Nitro, Odyssey, & protocols to watch
tweets:
