How you can benefit from ETH's merge
GM. I saw everyone freaking out the other day about the state of the crypto market. Then I checked ETH’s price and saw it was $1550-ish.
I guess it really dependent on people’s “anchor point.” Funnily enough, I remember when ETH dropped to a low of $100 in 2018, and $1,000 just a few months ago!
For me, Ethereum has always been a long term investment and not a trade. I care about the price a few years from now, not on a week to week basis.
Today We’ll Be Covering:
- ETH plays: A week left until the Merge! A few plays.
- Fundraising flow: VCs invested $500MM last week.
- DeFi Bites: MakerDao has a bold proposal, Binance is converting top Stablecoins to bUSD, and more.
- Tool: Where to find the best Stablecoin yields.
Let’s dive in!
📈 THE MARKETS
- Total Crypto Market Cap: $1.02T (+3.49%, 7 days)
- BTC Price: $19,313.57 (-3.6%, 7 days)
- ETH Price: $1,632.89 (+5.2%, 7 days)
- TVL in DeFi: $58.18b (-2.27%, 7 days)
- Fear & Greed: 20 (Extreme Fear)
“The four most dangerous words in investing are: ‘this time it’s different'.” — Sir John Templeton
💡 THE BIG STORY
Benefiting from Ethereum’s Merge
Ethereum has successfully passed its final test, the Bellatrix update. (I’ll save you from the Harry Potter jokes.)
Vitalik has officially confirmed that the Merge is happening sometime between September 13 and September 15.
How can you play the merge?
Option 1: Chill.
Don’t do anything. Sit tight.
Ethereum will conveniently handle everything for you. And once again, please ignore the scams. There will be a lot of b.s. spreading around asking you to update your wallets. You don't have to do anything.
Option 2: Buy Liquid Ethereum at a Discount
All staked Ethereum are trading at a discount right now, and there may be some even larger discounts available around the time of the Merge.
You have several options to take advantage of this:
My preferred option is RocketPool (rETH) as it’s the most decentralized, but well-known alternatives include Lido and Ankr.
Option 3: ETH Layer 2 Plays
Remember, the Merge is not meant – and will not – solve Ethereum’s high gas fees or scaling issues. Layer 2s are still crucial to Ethereum!
You can gain exposure by directly buying L2 tokens such as Optimism, Polygon, or Metis.
Arbitrum keeps gaining more and more traction, but it doesn’t have its own token yet. You may, therefore, wish to try using some of Arbitrum’s top protocols and hope for an airdrop one day.
Option 4: Ethereum Classic
In 2016, Ethereum split following a significant hacking incident known as “The Dao Hack.”
The result of this is the Ethereum we know today (headed by Vitalik), which is now transitioning to Proof-of-Stake.
However, the OG Ethereum Classic with the original code also continues to exist. As Ethereum transitions to Proof-of-Stake, some miners will choose to re-transition to ETH Classic.
All major exchanges and protocols will be supporting the new Proof-of-Stake version.
ETH Classic may also rise, primarily due to confusion arising between the two among uninformed investors.
It's dumb to invest in ETH Classic.
What am I doing?
30%-ish of my ETH holdings are in cold storage. They are sat in a Ledger wallet doing nothing, and I’m 100% fine with that.
You take on some level of risk if you decide to stake your ETH. You take on even more risk if you’re yield farming. So, I like retaining some in cold storage to protect against tail risks.
Remember that a significant number of people were devastated by Celsius because they tried squeezing every last ounce of yield.
Staked ETH. I have stETH (Lido Finance) and rETH (RocketPool). There may be some nice discounts for ETH soon.
Personally, I’m not trying to time anything. I like keeping it simple, and I routinely invest every month
Playing around on Arbitrum. I’m invested in various small caps and use various protocols (I might even get some Arbitrum tokens if there’s an airdrop)
I can’t stress this enough…when in doubt, keep it simple.
TOGETHER WITH DEFI SAVER
An Automated Way to LIMIT Your Losses
"Rule 1: Never Lose Money.
Rule 2: Never Forget Rule Number One."
DeFi Saver has a new feature that will helpfully limit your losses (and help you lock in more profits)!
First, what’s a 🛑 stop loss?
- You buy ETH at $1500.
- You set a stop loss at $1200.
- If ETH ever dips below $1200, your position is automatically sold.
Remember how ETH dipped below $900 back in June? A stop loss would’ve occurred, helping you out.
There’s also a slightly more efficient version of this called a Trailing Stop Loss.
What’s a TRAILING Stop Loss?
While the standard stop loss corresponds to a fixed $ number, a trailing stop loss corresponds to a percentage drop from the peak.
Above is an example from September 2021 with a 15% trailing stop loss for ETH (green line).
Instead of being static, the trailing stop loss follows the upward market movement by 15%.
This helps you lock in profits while the token prices are increasing.
DeFi Saver has now implemented trailing stop losses for MakerDao and Liquidity on ETH Mainnet!
Automatically Limit Your Losses with DeFi Saver
🍿 DeFi Snacks
MakerDAO might move $500MM+ of its $1.6B stored in the protocol’s Peg Stability Module to a Coinbase prime custody account. While this could generate 1.5% APY, bringing Maker’s an additional $24MM in revenue, there are concerns that this could also make DAI more centralized.
Binance has announced plans to stop supporting USDC, USDP, and TUSD. The exchange will still accept deposits and withdrawals, but users’ funds will automatically be converted 1:1 to BUSD, Binance’s own Stablecoin.
Nexo has allocated $50MM to buying back $NEXO tokens from the market. The purchase will happen in the next six months.
Arbitrum has completed its “Arbitrum Nitro” upgrade aimed at boosting transaction throughput and lowering transaction fees.
The FBI has issued an alert to DeFi investors and platforms, stating that cybercriminals are increasingly exploiting vulnerabilities, with more than $1.6B exploited in 2022 alone.
EU’s crypto legislation, called MiCA, will be ready in six weeks. The new rules are expected to create a common licensing regime and to allow easier operations for companies.
Curve, the stableswap-focused AMM, is going to be launching its own overcollateralized stablecoin, crvUSD, next month.
Binance’s BNB Chain introduced liquid staking with Ankr, Stader, and pStake. BNB users can now earn BNB staking yield while retaining their liquidity.
Apollo DAO’s liquid staking solution is now live on Cosmos. Starting with apOSMO, a liquid staking asset for OSMO, other Cosmos-based assets will become available at a later point in time.
Babylon Finance, the community-led asset management protocol, is closing its doors after being unable to recover from its RARI/FEI hack a few months ago.
Helium is down 15% after proposing a migration to Solana, spurring uncertainty. The crypto-powered wireless network intends to abandon its own blockchain and initiate a move to Solana.
What the Suits are Investing in
Despite the ongoing bear market, there are billions in private capital waiting to pounce on good deals.
In the past week alone, more than $500MM was raised across Web 3 projects.
1) Limit Break. The mobile gaming firm raised $200MM across two venture rounds led by Paradigm and Standard Crypto.
Limit break is a start-up founded by the CEO and CTO of mobile gaming firm Machine Zone. Their portfolio includes Game of War, Mobile Strike, and Final Fantasy: XV.
Game of War and Mobile strike are among the top grossing mobile games of all time. So, heavy hitters are entering Game Fi!
The aim is to incorporate NFTs into the free-to-play model for mobile games. Machine Zone’s first NFT collection, DigiDaigaku, is a collection of 2022 unique characters. It has so far accumulated a total volume of 6,400 ETH on OpenSea in under one month.
2) Animoca Brands: The metaverse investor and builder raised $100MM from Temasek, Singapore’s state investment fund. Temasek is one of the largest sovereign wealth funds in the world with more than $400B in AUM.
Animoca’s portfolio includes Axie Infinity, Dapper Labs (they created NBA Top Shot), and OpenSea. They also have a large stake in The Sandbox.
3) Proof: The membership NFT collection raised a $50MM Series A led by a16z. Proof Collective initially started off as a private group of 1,000 NFT holders.The company launched a successful NFT collection named Moonbirds, which has so far garnered over $200MM+ in sales (surpassing Azuki and Bored Apes).
The company is planning to release its third NFT collection, Moonbirds Mythics, in early 2023.
About the Author: Marco is a Research Director at DAR, a crypto market data & research firm that works with institutions the likes of FTSE Russel and Bloomberg. He also writes crypto analysis and musings on his personal blog, Pensive Pragmatism.
Where to find the Best Stablecoin Rates
As we’re still very much in a bear market, you’ve probably been wondering where to put your Stablecoins!
I’m a “Teach you how to fish” kinda guy.
One tool I use to keep up-to-date with Stablecoin rates is Stable Fish. On Stable Fish, it is really easy to sort by Stablecoins and chains. Even better, it has a simple interface.
Some Stablecoin Tips:
- Be cautious of auto compounders as they pose an additional smart contract risk. I do think Beefy Finance is solid though.
- Be careful of yields over 10%. Make sure you study tokenomics and understand how sustainable yields are.
- Monitor the yields. Stablecoin yields go down all the time. This could be because there’s an initial boost that subsequently diminished because people have entered the pools. I have a recurring weekly event on my calendar and a spreadsheet to go through and manually check the yield for each position.
- Diversify your Stablecoins. Each Stablecoin comes with its own inherent risks. USDC has some centralization risks, and we all know what happened with Terra’s UST...
Research Stablecoin Yields with Stable Fish
P.S.: A few larger influencer accounts promoted scams this past week.
People (rightfully) have started to become more suspicious of large content creators.
I wrote a thread on my background and goals with The DeFi Edge here, if you are interested: