Some trends for Quarter 4
GM. Quarter 4 is here!
You can smell the pumpkin spice in the air, and stores have started shilling Christmas items.
Despite the bearish macro environment, some people are hoping for a possible Uptober.
I want Uptober to happen as much as everyone else, but I'm cautious.
Today We’ll Be Covering:
- Q4 Narratives. Some things I’m keeping an eye on.
- Deal Flow. $2B funded last week. See where the money went.
- News. Kim K gets a fine for shilling tokens, Solana experiences another outage, and more.
Let’s dive in!
📈 THE MARKETS
- Total Crypto Market Cap: $1.01T (+5.44%, 7 days)
- BTC Price: $20,035.08 (+3.1%, 7 days)
- ETH Price: $1,351.95 (+1.6%, 7 days)
- TVL in DeFi: $55.75B (+2.0%, 7 days)
- Fear & Greed: 26 (Fear)
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” George Soros
💡 THE BIG STORY
Quarter 4 Trends and Narratives
It’s always a good idea to stay on top of the narratives and technologies that are in development. That way you can start planting your seeds organically, instead of trying to play catch up in the next bull market.
Here are some narratives that I’m currently researching and keeping an eye on.
Note: None of these are recommendations to buy. I’m sharing my personal research with you, and various trends that I’m monitoring. I'm shining spotlights on a few things and you gotta do your own research.
The World Cup is Coming
The World Cup is the largest sporting event in the world, and is projected to have over 5 billion people tune in to watch. That’s a lot of eyeballs!
(By the way, it’s November 20th to December 18th this year. I’ve apparently been living under a rock or something because I thought it would be in the summer as usual).
Algorand is a Layer 1 blockchain and the official blockchain partner of the World Cup.
FIFA is partnering with Algorand to release an NFT collection highlighting classic moments from the World Cup’s history. I wonder if there will be an NFT for Maradona’s Goal of the Century...
If you recall, the NBA’s TopShots were on fire last year. And football fans are, arguably, even more passionate than basketball ones.
Algorand is one of the few Layer 1 projects whose Total Value Locked has been on the rise in recent months.
Fan Tokens and Chiliz
Fan tokens is a sector that is increasingly gaining more and more attention. And the World Cup might provide the tailwind it needs to reach new heights.
A quick 80/20 on what Fan Tokens are:
- Fungible tokens issued by Sports teams. The primary market currently constitutes football (soccer for the Americans) clubs.
- They provide minor benefits. If you hold the token, you get to vote on minor decisions. The utility isn’t too impressive right now, but, importantly, the potential is there. It makes me wonder when we might see the very first sports teams run 100% through players voting on the blockchain.
- While tokens are scattered on different platforms, Chiliz (CHZ) holds the greatest market share. Some central exchanges, such as Binance and MEXC, are also creating their own tokens and partnerships.
With the World Cup coming up, I’m projecting a nice bump for National Team fan tokens.
However, this also introduces a new kind of risk. Remember when Germany surprisingly 7-1’ed Brazil a few years ago? Imagine what would have happened to the price if fan tokens had existed back then!
Berachain - a DeFi focused chain on Cosmos
When I first heard about Berachain a few months ago, I wasn’t really sure if this was a serious project. And perhaps it is exactly this that makes them interesting: they don’t take themselves too seriously, and they go hard with the memes.
But underneath the goofiness lies a serious project.
An EVM-compatible Layer 1 chain built on Cosmos.
I know, I know…another EVM-compatible Layer 1? It’s set to launch in 3-4 months and already building a cult-like following.
What Makes It Interesting:
- Proof of Liquidity Consensus. This allows users to stake assets such as BTC, ETH, and Stablecoins to validators.
- Multiple Tokens.
- Bera – Gas for transactions
- GT – An NFTGovernance token
- Honey – OvercollateralizedStablecoin
- Partnerships with Redacted Cartel, Synapse, CrocSwap, and more.
Not too much official information has been released just yet, however, the Litepaper should be coming to the website soon.
This is definitely a project I’ll be paying close attention to in the near future.
I’m not going to go into too much detail because I already covered this in last week’s email.
$UST collapsed. USDC sanctioned some Tornado cash users. DeFi needs decentralized Stablecoins now more than ever.
A few are on the rise:
- Aave’s GHO
- Curve’s crvUSD
- Kujira on Cosmos released $USK
- Shade Protocol’s Silk. It has built-in privacy and it’s pegged to a basket of goods (instead of just USD)
DeFi x NFT
NFTs haven’t had too much utility other than the occasional Twitter PFP flex. Slowly, though, we are starting to see an interesting intersection between DeFi x NFT, the main utility being that NFTs can be used as collateral in borrowing assets like Stablecoins.
NFT volume has dropped drastically over the past few months. But I also believe that NFTs can break ATHs again in the next cycle.
ETH Layer 2s
Optimistic rollups, such as Optimistim and Arbitrum, have been dominating in the past few quarters.
But we haven’t seen the full power of ZK rollups yet. I’m personally excited for Starknet, zkSync, and Polygon Hermez.
Hint: Use L2beats to keep an eye on L2 adoption.
(If you don’t understand the difference between an Optimistic rollup and a ZK Rollup, I promise it’s worth going down that rabbit hole of research.)
The New Venture Capital Powered Layer 1s
We’ve seen so many “ETH killers” proclaimed in the last cycle. We have another round to go.
The latest entrants are called called Aptos and Sui.
- They’ve raised a ton of money. Over $300MM each by top Venture Capitalists like FTX, a16Z, etc.
- Strong teams. The leadership has been plugged straight from the team at Meta’s Diem project.
- dApps are already being built on these platforms.
- They both use their own versions of the Move programming language.
This isn’t meant to be a complete list of narratives, just a select few that I think are interesting to follow.
👨💻 TOGETHER WITH DEFI SAVER
DeFi Saver is Powering Up Your Compound V3 Experience
Compound, a leading ETH lending protocol, has released its highly anticipated Version 3.
And DeFi Saver also has some new releases to streamline your Comp V3 experience.
Here’s What DeFi Saver is Doing:
- Dedicated Compound v3 Dashboard. You can deleverage in one transaction. And you can combine multiple actions like supply + borrow or payback + withdraw in one transaction. Handy!
- Automated Leverage Management. Save time with auto-repay and auto-boosting.
- 1-Click Transfer/Migration.
- Loan shifter support for easy 1-transaction transfer from other protocols or Comp v2 migration
- Collateral swaps
- Recipe Creation Support. You can combine Comp v3 actions with other protocols.
(Example: borrow base asset USDC and supply it to one of the yield farming protocols for Comp interest + COMP incentives + yield interest)
- *New* Notification System. Stay on top of your positions with automated notifications about position ratio changes and any executed transactions that are sent straight to your email or Telegram.
I’m a huge fan of automation, and DeFi Saver is leading the charge!
Automate Your Compound V3 Experience with DeFi Saver
🍿 DeFi Bites
Kim Kardashian was charged by the SEC and has agreed to pay $1.26M to settle the charges and to abstain from promoting crypto assets in the next three years.
Solana is experiencing another major outage. On October 1st, Solana was down for at least six hours due to a misconfigured node. This is the 4th major outage since January 2022.
Uniswap Labs seeks $100MM funding at a $1B valuation. For this purpose, they have engaged a few investors, including Polychain. The deliberations of this round have not reached the final stage; therefore, the terms of the deal could still change.
Cardano launches a $200MM ecosystem fund. The capital will be used to fund projects being built on the Cardano network over the next three years.
Circle announces its cross-chain transfer protocol. The protocol is expected to go live on the Ethereum and Avalanche mainnets by the end of this year, and integration with partners including Allbridge, Axelar, BitGo, and others will also go ahead.
SushiSwap elects a new leader after months of deliberation. Jared Grey was chosen from the top five contenders as the new “head chef” after two weeks of debate.
Ribbon’s lending product is live. It currently offers 9% APY by allowing investors to lend capital to trading firms Folkvang and Wintermute. Investors are able to put in their capital with a zero lock-up period and the flexibility to withdraw at any time.
Abracadabra’s strategy for LUSD is live. The LUSD degenbox built on Abracadabra will reward its users with a higher yield and a 0% management fee.
Olympus says goodbye to high APY. The organization has reduced its annual percentage staking yield to 7.35% while rewards were also reduced following the DAO’s approval of OIP-119.
Safe launches safeDAO and SAFE Token. The SAFE token will be used to ensure the decentralized governance of SafeDAO. As of right now, Safe has secured around $40B in self-custodial accounts.
0VIX is aiming to become the leading lending market on Polygon with unique veTokenomics and dynamic interest rates. They’re in beta and are offering enticing $VIX pre-mining rewards when you supply and/or borrow assets on their DApp. Start Earning $VIX today! *
* This is sponsored advertising content.
🤝 Deal Flow(s) of the Week
In the past week alone, more than $2B was raised across the web 3.0 ecosystem for new funds and projects.
- NYDIG: Institutional investment services firm NYDIG has raised roughly $720MM to date for its Bitcoin fund. It acquired those funds from 59 investors, according to its filing with the SEC. It’s not yet clear when the fundraising will stop, or when they’ll deploy this capital.
On December 2021, NYDIG was valued at $7B. The firm plans to expand its institutional-level services to Lightning Network payments, smart contracts, and asset tokenization.
NYDIG is a subsidiary of Stone Ridge Holdings Group, a multi-billion asset management business.
- Cardano/Emurgo: The founding entity behind Cardano, Emurgo, will invest over $200M to support the growth of the Cardano ecosystem over the next three years. In particular, Emurgo will help with protocol and product developments.
The funds come directly from Emurgo’s own capital. $100MM will be given towards investments in Africa in accordance with the firm’s initiative to bolster the usage of crypto in daily life.
- Strike: Chicago-based Bitcoin payment provider raised an $80MM Series B funding round led by Ten31. This capital will be used to improve Strike’s payment network for merchants and consumers.
Some e-commerce companies, such as Shopify and Blackhawk, have been using Strike’s application on their platforms.
Strike utilizes the Bitcoin Lightning Network to scale quicker and to help merchants complete payments without first having to wait for block confirmation from the Bitcoin blockchain.
Additionally, there are three other high-profile raises in progress.
- Uniswap is seeking $100MM+ at a $1B valuation
- Pantera Capital is seeking $1.25B for its second blockchain fund
- DeFiance Capital is seeking $100MM to invest in liquid tokens.
Marco’s Take: While private market activity seems to be moving along really well, it’s without a doubt that we will need some of that capital to trickle into the public crypto market in order for the industry to be reinvigorated.
We can’t repeat the same mistakes from the 2017-2018 ICO cycle which caused a lot of pain for retail due to a lack of PMF and favorable funding terms for private investors, hurting the broader ecosystem in the long-run.
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.