Weekly Alpha Leak 🚰 Who is Jackson and Why Should We Care About His Hole?
Week of August 20 - 26, 2022
The markets traded sideways the entire week because everyone was so concerned with Jackson and his hole.. Now we’ve gotten some clarity. Read on to find out about why you should care!
- Jackson Hole Conference verdict: Hawkish :/
- Ethereum Merge 2 part update. Part 1 begins September 6
- Top Daily Bullets: BendDAO liquidity crisis, Ready Player Me raised $56M led by a16z, Symbolic Capital launched by Polygon and Cere Network founder raised $50M, Tether not freezing Tornado Cash addresses for now, Sam Trabucco resigned as co-CEO of Alameda Research, Coinbase launching its own liquid staking token, cbETH
- Scammy Shit: Bitboy backs down on lawsuit, OpenSea insider trading securities clarification, Celsius countersues KeyFi, SudoRare $800,000 rug pull, Former NetVRk CEO claims fraud by team, Dogechain developer wallet caught dumping tokens
- Data Highlights by @Dynamo_Patrick: Canto TVL grew 333% to $84M, GMX and Synthetix saw the strongest revenue growth, Ethereum mainnet transactions dropped 2.9%
- DeFi Highlights: Compound v3, Synthetix founder proposed ending protocol inflation, Huntingdon Valley Bank and Maker make DeFi real-world finance history, Uniswap exploring NFT financialization, Trader Joe introduced Liquidity Book, a next gen AMM protocol, Thorswap launches cross-chain swaps, $74M Uniswap Foundation proposal passes
- NFTs/Metaverse: X2Y2 launches custom royalty function, Telegram may launch NFT marketplace, Bored Apes and Moonbirds playable avatars in Sandbox Season 3, NFTs worth $100.6M stolen, Pudgy Penguin sells for 400 ETH
Before we get started...Want early access to our research threads? Sign up to our Substack to receive daily coverage on everything you need to know about going on in the crypto directly in your inbox.
Done? Now let's dive in!
⛓ Crypto Highlights of the Week ⛓
Get your minds out of the gutter! This is serious economic business! All eyes of those active in financial markets were on the Jackson Hole conference in Wyoming, US, where The Federal Reserve Bank of Kansas City has hosted its annual economic symposium in a lodge in Grand Teton National Park since 1982. 120 of the world's top central bankers, economists, and policy makers gather to discuss important economic trends and issues. The most-anticipated event coming out of the conference was Fed Chairman Jerome Powell's speech in which he was expected to shine some light on future policy moves. We currently know that the central bank's resolve is to push inflation down closer to its 2% goal and has resulted in a fairly obvious general risk-off sentiment.
And so why then should you specifically care about Jackson Hole?
What those of us in the crypto markets are most interested in is the language used or hints about what might come next from policy makers. Any dramatic change in policy from the Fed could send the crypto markets up or down significantly. Focus was on how Powell views the macroeconomic landscape facing the Fed and if he provided hints as to whether the central bank is finished raising interest rates. The reasoning is that any further tightening by the Fed will send the crypto markets lower and if the Fed signals that it is done tightening, crypto might be in for some fun!
Jerome Powell delivered a hawkish speech at Jackson Hole, stating that a single month’s improvement is not enough to return inflation to 2%, and “restoring price stability will take some time and means using [FED] tools forcibly.” This implied that restrictive monetary policy will likely be required for some time and households and businesses will feel the pain as the bank acts to rein in inflation. So the main question was whether we can expect risk-on sentiment to resume? The language used signals that we are not YET at that point and face further interest rate hikes until the issue of inflation is deemed “under control.” How long? That remains to be seen.
The Ethereum Mainnet Merge is just on the horizon! I’m sure you’ve heard by now.. This is without a doubt the most highly anticipated and current biggest narrative in the room that we’ve got at the moment. The Ethereum foundation has finally announced an official timeline. Previously we’d been working with a tentative date of September 15-16. Now we have clarification that the Merge will be split into two upgrades, the Bellatrix upgrade is scheduled for epoch 144896 on the Beacon Chain -- 11:34:47am UTC on Sept 6, 2022, and Paris, the execution layer's portion of the transition, will be triggered by the Terminal Total Difficulty (TTD) of 58750000000000000000000, expected between Sept 10-20.
This Week’s Top Daily Bullets 💊
- NFT Lending protocol BendDAO had its contract drained with 15 ETH left to pay lenders. Many NFTs that were used as collateral in the platform defaulted without any bids. BendDAO took action with a vote to make short-term changes to handle the liquidity crisis. Annual APR eventually went back to 11% for lending ETH so people can buy NFTs on leverage, so crisis averted?
- Metaverse avatar platform Ready Player Me raises $56M led by a16z with Konvoy Ventures, Collab Currency, Taavet Hinrikus and Sten Tamkivi's Plural Platform and comedian Kevin Hart's Hartbeat Ventures participating. High-profile angel investors, including Roblox co-founder David Baszucki, Twitch co-founder Justin Kan and Punk6529, also backed the round
- Symbolic Capital, a venture capital firm launched in May by Polygon founder Sandeep Nailwal and Cere Network founder Kenzi Wang, has raised a $50M VC fund and is specifically focused on supporting founders from emerging markets that have often been passed over by traditional VC. The fund is backed by crypto exchanges, protocols, auditing firms, and traditional LPs such as family offices and institutions
- Tether holds firm on their decision not to freeze Tornado Cash addresses and is awaiting law enforcement instruction. So far, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN List or that are operated by persons and entities that have been sanctioned by OFAC. The language leaves it open ended if they will eventually submit to sanctions once prompted by authorities
- Sam Trabucco has resigned as co-CEO of Alameda Research. He stated he has not been involved in day to day operations for a while and will still continue on as an advisor but that co-CEO Caroline Ellison will continue as sole CEO. Genesis Trading CEO coincidentally stepped down on the same day.
- Coinbase is launching its own liquid staking token, called cbETH, which stands for Coinbase Wrapped Staked ETH, ahead of Ethereum's Merge and aims to cut into Lido's approximate 90% dominance of the market. Users will be able to transfer for cbETH as early as August 25 at 12:00 p.m. EST, provided that necessary liquidity conditions are met
These are just our top six bullets, want more? Check out our daily newsletter:
Scammy Sh*t 💩
- YouTubers lawsuit: BitBoy Crypto announced a lawsuit towards Atozy for defamation for calling Bitboy out on his past behavior of undisclosed paid shills. Cobie donated $100,000 and Bitboy was quick to rescind his lawsuit and say he was sorry this had to go public..
- The former OpenSea employee accused of insider trading filed a motion to dismiss the indictment against him, with his lawyers arguing in the motion that NFTs are neither securities nor commodities, and wire fraud cases require trading in securities or commodities. The issue of whether NFTs and other cryptos are securities has long been discussed and we’re moving towards the endgame of getting some clarification on the matter
- Celsius filed a countersuit against the former head of its staking subsidiary, Jason Stone, and the firm it acquired, KeyFi for losing tens of millions of dollars through ineptitude while trading NFTs. Celsius says Stone and KeyFi used Tornado Cash to launder the assets. Six weeks ago, Stone sued Celsius, accusing the firm of mismanagement and fraud, and claiming it is owed money based on hundreds of millions in profits generated.
- NFT exchange SudoRare suffered a $800,000 rug pull barely six hours after launch. SudoRare was supposed to be a combined fork of SudoSwap and LooksRare and allow users to stake SR, the project’s native token, to earn ETH trading fees on the platform
- Former NetVRk CEO, Daniel Kennedy, claims founders used investor funds to buy a real-world luxury home. He took to Twitter using the company account to send tweets that have since been deleted and accuse several senior leadership team members of misappropriating investor funds for personal gain
📊 Crypto Market Data Highlights of the Week 📊
✍️ From our special guest contributor: Patrick Scott from Dynamo DeFi
- Canto, a new Layer 1, saw its TVL grow 333% to $84M this week. This comes less than 2 weeks after this chain launched.
- GMX and Synthetix saw the strongest revenue growth out of major DeFi protocols this week. GMX revenue grew 47.5% week-over-week and Synthetix revenue grew 53.8%.
- Ethereum main net transactions slowed down this week, dropping 2.9%.
🏦 DeFi Highlight of the Week 🏦
- The proposal to launch Compound III succeeded with 200 addresses voting - 1,203,196 COMP in support. This moves the DeFi protocol away from a pooled-risk model, where users can borrow any asset. Compound v3 targets security, scalability, limits the protocol’s supported tokens and introduces governance changes
- Synthetix founder Kain Warwick proposed a new proposal SIP-276: aiming to end inflation with the total supply of SNX tokens capped at 300M. The idea is to finally turn off the money printer which was originally necessary to bootstrap the protocol. Synthetix would much more closely resemble a traditional business by simply generating fee revenue and distributing the proceeds to SNX holders. Related to the growing acceptance of the “real yield” narrative
- Huntingdon Valley Bank and Maker pioneer the first commercial loan participation between a U.S. Regulated Financial Institution and a decentralized digital currency. A defining moment to envision the potential of connecting decentralized finance and real-world finance
- In a tweet from the head of NFT product, Uniswap is allegedly in contact with several NFT lending protocols and is exploring NFT financialization. They are interested in tackling both liquidity issues and the “information asymmetry” surrounding NFTs
- Trader Joe introduced Liquidity Book, a next gen AMM protocol that is highly efficient, flexible and built for DeFi. This ground-breaking architecture pools liquidity into constant sum price bins which are aggregated to form a market. LB provides traders with zero or low slippage trades, for any trade size, due to constant sum price executions
- Thorswap, a multichain DEX aggregator, has launched cross-chain swaps for over 8,300 ERC-20 tokens. This removes the need for users to bridge assets and enables native asset swaps directly in its platform
- The $74M plan by two former Uniswap Lab executives for a new Uniswap Foundation has passed after their proposal received over 99% of the votes from Uniswap holders. The foundation’s aims to streamline Uniswap’s Grant Program and reduce friction in the protocol’s governance system. Raised questions regarding centralization
🖼 NFT and Metaverse Highlights of the Week 🖼
- X2Y2 has launched a custom royalty function, and buyers can now choose the amount of royalties they would like to contribute to projects. This is important and follows a trend set by Sudoswap of eliminating creator royalty fees.
- Telegram may launch a new marketplace to allow users to transfer usernames via “NFT-like smart-contracts”
- Bored Apes and Moonbirds to get playable avatars in new Sandbox Season 3
- NFTs worth $100.6M were reported stolen over the 12 months ending in July, according to a new report by blockchain analytics firm Elliptic
- Despite the NFT sector going through a lengthy bear market, one Pudgy Penguin NFT has recently sold for a whopping 400 Ether (ETH) on Monday, worth roughly $670,000 at current prices
The crypto space is a wild and fast paced, evolving landscape - however one filled with recurring themes and trends. The point of this newsletter is to highlight the story of crypto - as it's told over time. The board, the players, and the game itself. Follow along as we catalog and organize the chaos.
Subscribe to receive our daily brief and extended weekly newsletter along with in-house research content!
Please Share, Leave Feedback, and Follow Us on Twitter, Telegram, and LinkedIn to stay connected with us.