Embrace Being an Idiot - It WILL Make You a Better Crypto Investor
Weekly Hot Take + Market Overview + Highlights
🗓 February 11-17, 2023
Today’s newsletter is 2339 words. A brisk 9 minute read.
Building off last week’s exploration of why fundamentals won’t make you a better crypto investor. What better way to complement it than what WILL make you a better crypto investor.
Key Points Covered:
- Embrace Being an Idiot
- So Simple an Idiot Could Understand
- Your Job is to Sell an Idea
- Broke & Bespoke Examples
Embrace Being an Idiot - It WILL Make You a Better Crypto Investor
In a continuation of this new weekly series exploring hot takes, gritty themes, and taboo topics in crypto - we’re building off last week’s exploration of why fundamentals won’t make you a better crypto investor. What better way to complement it than what WILL make you a better crypto investor.
You must embrace being an idiot! Channel the essence, feel it, breathe it, accept it, let it course through your veins. There are so many smart people in this space and that can often be a detriment to them. People tend to overthink things, focus on complexity and overall forget what moves the market. One golden principle that you should follow is that an idea should be so simple an idiot could understand it.
Pause and take that in. An idea needs to be so simple that a genuine idiot could understand it. The less words the better. Complexity is anathema to what you want when you’re trying to sell something to someone. And make absolutely no quarrel that that is exactly what your goal is here - to sell an idea, hope or vision of the future to someone. Otherwise why are you reading up to the third paragraph of this?
We’ve already established in recent hot takes that crypto in its current form is primarily driven by hype, narratives and catalysts. Think about yourself or others you may know. What brought you here? Was it the shot at making lots of money like you’d seen others make or was it the feel good narrative that crypto would revolutionize the world and you were early to it?
Did it inspire you? Make you feel like you were part of something? There’s no doubt that the initial idea of how decentralization and blockchain have the potential to revolutionize our financial systems is a really good selling point! It attracts and captures the imagination of many a novice investor. Be honest, you probably got sucked in by it yourself or know someone who did.
If you want to be in the business of succeeding over the long term, you have to place yourself in the mindset of future buyers. You are going to sell them something. That is how you profit. What is it that you will sell them? It could be a service or product but primarily it’ll be tied to an idea, feeling, brand, story or impression. People buy into stories. And the easier to understand, the better.
Example of broke: zero knowledge succinctly proofed at the data availability node modular data layer allows cross-chain-zero-channel compression finality which results in consensus of byzantine acyclic settlement and the end result is interoperable x-chain vault yield optimized bridge transfers.
Bespoke: It transfers the stuff you care about safely, securely and fast to a place where there’s lots of new opportunities so that you can make money! Wow! Nice! That sounds great. Who wouldn’t want that? This is simple to understand.
Go for simple ideas that even an idiot could understand. It keeps your funds safe, it saves you money, it’s faster, it fixes a problem, it entertains you, it’ll revolutionize finance, etc. This is what appeals to a broader audience. These are the things people care about. So much more core and personal than the boring tech and fundamental approach in a sea of competitors who all honestly have similar products. How many L1s, wallets, DEXs, lending/borrowing markets, etc are out there? Will success be found in the one who has a slight edge over its many competitors?
Isn’t all of this speculative? You betcha! And as history shows time and time again, when there is hype and speculation - there is opportunity. So that is what the focus is here. Crypto may end up being the future and it may not - only true adoption will determine that. What we can control is our smart (pronounced being an idiot) approach to crypto.
Let’s explore further with some analysis of what has come and gone and approach it from a broke and bespoke perspective.
Ghosts of Narratives Past
Broke: They are just silly dumb pictures with no inherent value or utility. There’s no way I’m paying hundreds or thousands for a JPEG. They’re going to zero.
Bespoke: A new asset class has entered the arena! People love new things. It generates hype, interest, speculation and draws in a flood of people looking to build and make their mark. Smells like opportunity!
Alt Layer 1s
Broke: I’m so smart having figured out Ethereum will be the dominant L1 because the tech and specs are in my opinion the best. No one should bother wasting their time anywhere else - You are so dumb on your little ghost chains!
Bespoke: ETH is pretty expensive for new users… No way are regular people going to be paying 25-50 dollars in gas transaction fees. Look at all these new and exciting chains which are focusing on their own specific use cases. It’s attracting money, builders and users priced out of ETH. Smells like opportunity!
GameFi & Metaverse
Broke: Technology is still so early and games look dumb. Blockchain is such a grift and there’s no place for it or NFTs in games. Plus the economic models are immature. It’s all one big ponzi!
Bespoke: Gaming is huge in the real world! Being able to tap into the gaming sector with blockchain will be massive. Tokenomics and in-game economy models for several early projects may be terrible but gaming is one of the most likely avenues to onboard millions of new crypto participants. Smells like opportunity!
Broke: Useless. No use case. Grift. Ponzis. Stay away from memes.
Bespoke: Literally most people got into crypto or heard about it because of some meme coin someone got rich off of. That is what draws people in and creates that influx of liquidity. Dreamers dreaming of making it big. Smells like opportunity!
Now let’s focus on the newest player on the block
Broke: Blockchain and crypto don’t mix! What could possibly be the use case for it? Sounds like the latest grift to capture attention. Insert all the AI haters.
Bespoke: Smells like opportunity!
At the end of the day, it’s important to know the state of the market, the participants, their goals and motivations, as well as the pros and cons of the various different sectors and narratives. Embracing being an idiot in crypto does not mean to be a literal idiot, but to open your mind to what the greater market is thinking. Place yourself in their shoes and see what they see, think how they think. Are regular people out there obsessing over the tech specs and “fundamentals” or are they buying into ideas?
Stay tuned for future topics where we continue exploring this train of thought which include the cold, harsh, cruel attention economy and how everyone is trying to extract value from you. It’s tough out there!
Stay safe and be the smartest idiot you can be.
📊 Market Update
Crypto Market Cap: $1.08T, up from last week’s $1.01T
Stablecoin Exchange Reserves: $24.349B, down from last week’s $26.193B
Stablecoin Total Market Cap: $136.29B vs last week’s $136.61B
DeFi TVL: $49.11B, up from last week’s $47.07B
Exchange Volume: $513.45B so far for the month of February vs $797.23B total in January
Dex Volume: $37.2B so far for the month of February vs $61.29B total in January
Ethereum NFT Volume: $341.13M so far for the month of February vs $616.99M total in January
📈 Charts You Need to Be Paying Attention To
- With the recent SEC and regulatory developments surrounding Binance, BUSD and Paxos, you should be paying attention to stablecoins. Don’t forget they are the lifeblood of crypto. BUSD (purple) and USDC (orange) had been gaining in dominance but now the picture looks different. While other marketcaps are dropping, USDT (blue) is seeing a boost.
- USDT currently makes up over 51% of the total stablecoin market cap. Who else will rise and who will fall as regulators continue clamping down on crypto? Are your funds safe?
✅ Top Crypto Highlights of the Week
- Circle ratted on Paxos and alerted NYDFS that Binance’s stablecoin wasn’t fully backed
- Circle denied rumors that it received a "Wells Notice" over USDC
- Mt. Gox creditors elected to get recovery paid out mostly in bitcoin instead of fiat
- SEC charges Terraform and Do Kwon for fraudulently misleading investors
- Do Kwon transferred over 10,000 Bitcoin and turned some into cash via a Swiss bank
- Stanford Research Director and former Dean revealed to be SBF’s bond signers
- Accused Mango Markets exploiter wants to keep $47M in disputed funds
- SEC to sue Paxos for listing Binance USD stablecoin alleging it is an unregistered security
- Coinbase says its staking services are not securities
- Mysten Labs CEO Evan Cheng is seeking to raise over $100M for a web3 fund
- Binance expects to pay fines to settle US investigations
- Arrest warrant for former CEO of Tmon, a Korean e-commerce platform, for promoting Terra
- Celsius Network proposes a sale and restructuring to NovaWulf Digital Management
- Genesis unveils proposed sale plan with DCG and bankruptcy creditors
- Siemens issues first digital bond in accordance with Germany’s Electronic Securities Act
- CME Group expand to include Bitcoin futures on March 13, pending regulatory review
- U.S. bankruptcy court approved the selling or transferring of certain FTX assets
- Limit Break paid $6.5M for a SuperBowl commercial for freeNFT mint
- Binance reverted withdrawal fee levels on the Tron network after community feedback
- PayPal is pausing work on bringing its own stablecoin to market
- UAE plans to issue a CBDC to promote digital payments
- Citadel Securities takes 5.5% stake in crypto-friendly bank Silvergate Capital
- MetaMask asked users to discard a phishing email sent from Namecheap
- Napster buying music startup Mint Songs amid shift to Web3
- Tether nears 50% of stablecoin market, highest in 14 months
- Wormhole bridge exploiter supplies $46M to crypto lending platform Maker and buys WETH
- Clearpool will deploy its institutional credit platform Prime exclusively on Polygon
- Wirex partnership with Visa to expand to 40 countries in Asia-Pacific and the U.K.
🆕 Project Updates
- Ethereum’s Sepolia testnet Shanghai upgrade set for Feb 28
- Blur airdrop and trading launch
- Blur will enforce full creator royalties for any collection that blocks trading on OpenSea
- Polygon plans to launch its new Layer 2 scaling solution, zkEVM, on mainnet beta on Mar. 27
- Matter Labs renamed zkSync 2.0 to “zkSync Era” and is making its code open-source
- China Telecom partnered with Conflux to develop Blockchain-enabled SIM cards - BSIM
- Polygon exploring use of ZK technology for main chain
- Platypus USD lost its dollar peg following exploit that drained $8.5M from liquidity pools
- OKX launch a new Blockchain OKBChain, which will be launched in Q1
- NBA Top Shot mobile launch through Apple’s iOS App Store and Google’s Android Play Store
- ConsenSys partners with Mercuryo to offer seamless crypto purchases within MetaMask
- Sony teams up with Astar Network for Web3 incubation program
- SushiSwap acquires Cosmos-based trading platform Vortex Protocol
- Words With Friends creator previews Wildcard NFT game on Polygon
- Launching Sushi Studios - a decentralized brand licensing & incubator framework
- Reminder: more Optimism airdrops to come
- Lido Finance and Optimism new 1M OP token incentive grant program for liquid staking
- Flashbots has introduced a new protocol called MEV-Share
- Japanese SoftBank will become an official network validator on Oasys
- Magic Eden partnered with web3 infra company MoonPay lays off 22, about 15% of staff
- Avatar has become the fifth-largest holder of Polygon (MATIC)
- Rainbow Bridge restored after a temporary suspension due to security concerns
- Azuki - Introducing Jay & Jelly - BEANZ
- DOS Labs, a gaming studio, launched its Avalanche Subnet
- Square Enix will launch its upcoming NFT-based game Symbiogensis on Polygon
- Filecoin will launch smart contracts in March, making it a fully-fledged L1
- NFT marketplace Rarible expands aggregation to Tezos
- eBay NFT platform KnownOrigin launches creator smart contract
- Centrifuge is looking to become the real-world asset facilitator for Aave’s new stablecoin, GHO
📝 Good Tweets
Highlighting how airdrops are broken
1/ In light of the $BLUR airdrop, it's important to highlight that airdrops are still broken.
They do one thing well: provide sufficient float for accurate price discovery.
People selling an airdrop is OK because you need buyers and sellers to make a market.
— Dmitriy Berenzon (@dberenzon)
Feb 14, 2023
Exploration of what future airdrops will look like
Prediction that in the future, consumer token airdrops will resemble web2 incentive programs: largely used to engage and incentivize users who already have product-market fit and intrinsic interest to use a product, rather than to acquire new users.
— Li Jin (@ljin18)
Feb 15, 2023
Crypto gaming interoperability and what it really means
"Interoperability" in crypto gaming is controversial. Does porting your WoW mount into GTA really make sense? 🐉
With GDC right around the corner, there's still a ton of misunderstanding on both the web2 and web3 sides. Dig in.👇
(Thread below...)… twitter.com/i/web/status/1…
— Sam Peurifoy 👾 (@SamPeurifoy)
Feb 15, 2023