📬 Today’s Send

_{Disclaimer: Nothing we publish should ever be construed as financial advice. We strive to be unbiased, but may have ownership interests in projects mentioned. DYOR.}

📈 Market Movements (Apr 29 - May 6)

BTC $29,289 (+0.67% 7D)
ETH $1,935 (+1.35% 7D)
BTC Dominance 48.56% (+2.66% 7D)

BTC price action followed a nice V-shape this week. Last Saturday BTC was at ~$29,344 before falling 5.64% to a weekly low of $27,673 on Monday. Since April 30, 5k more bitcoins have been sold, but at the time of writing price has fully recovered. BTC now sits at $29,289 - a full 7 day round-trip.

Economy Heat Check

• The Fed raised rates 25bps yesterday from 5% to 5.25%. A 16-year high. this marks the Fed’s 10th consecutive rate increase.

• Fed officials signaled a possible pause in raising, but are waiting to see inflation cool down first.

• First Republic fails, becoming the 2nd-largest banking collapse in U.S. history.

Last week’s lead story covered the U.S. regional banking sector crisis in great detail. Get caught up here.

📜 Stories of the Week

Here’s the top stories unfolding right now:

🙏 _{I won’t be talking about Gary or the SEC this week. Feelz good.} 🙏 

🟧 BLEND LAUNCH STANDS OUT (BLUR)

Blur launches its NFT lending platform Blend. Could this kick off NFTfi Summer?

Pacman has swallowed up more market share as Blur unveiled its new lending protocol Tuesday, Blend. The JPEG gambling trading platform of choice just became even more degen, as holders can now borrow against their Milady pictures for maximum leverage. Further, traders can now use a Buy Now Pay Later (BNPL) option to acquire NFTs with just a fraction of the full price as collateral.

_*partially

Launching in October ‘22, Blur quickly made waves, seizing the #1 spot in NFT trading volume from OpenSea after airdropping 360 million $BLUR tokens in February. Despite a steep drop in token price and daily volume since then, Blur still maintains pole position, with roughly 60% market share to OpenSea’s 19%.

Admittedly, volume figures alone are highly misleading, as no doubt a very large percentage of these transactions are farmers looking to capitalize on Blur’s Season 2 airdrop (purportedly ending in May). For now OpenSea still holds the crown, dominating in user count and total trades.

OpenSea remains on the back-foot however as Blur continues to innovate at a faster rate. This trend only continues with the launch of their new lending protocol Blend.

What is Blend?

Blend is a new NFT lending platform that consists of two main features:

1. Peer-to-Peer NFT lending (for lenders and NFT holders);

2. Buy Now, Pay Later NFT purchasing (for traders / collectors).

Let’s quickly dive into both.

Peer-to-Peer NFT Lending

Peer-to-peer NFT lending models have existed for a while now, with market leader NFTfi having faciliated approximately $125 million dollars in loans for 155 different NFT projects since mid-2020.

What’s different about Blend’s offering?

With the help of the gigabrains at Paradigm, Blur has designed a new peer-to-peer lending mechanism featuring:

• No Expiries (PERPETUAL NFT LENDING… bruh)

  • Loans are perpetual by default (no fixed maturity date). Loans are open indefinitely, with a fixed interest rate agreed upon between the borrower and lender.

  • Borrower can close out their loans at any time (by repaying in full).

  • Lenders can exit at any time too by triggering a “refinancing” auction. This involves a Dutch auction where interest rates start at 0% and increase until another lender purchases the loan. If no lender steps in, the collateral is liquidated.

• No Oracles

  • Blend does not use price oracles to enforce liquidations, unlike the peer-to-pool (P2P) model. The philosophy underlying this is that loan terms for NFTs need to be set individually, on a case-by-case basis (unlike P2P which mostly uses floor prices).

  • Because Blend doesn’t need oracles, it can support whatever collateral types and LTV the market will bear.

Naturally, there are both benefits and drawbacks associated with this model.

• Pros

  • More flexibility for borrowers & lenders due to absence of loan expiration dates.

  • Dutch auction refinancing can help borrowers find new loan terms and lenders recoup their capital.

• Cons

  • Higher risk and effort for lenders since they must continuously monitor the value of NFTs.

  • Overall a more complex process than traditional peer-to-peer NFT lending.

Buy Now, Pay Later (BNPL)

• Pretty self-explanatory, working the same as existing BNPL models in other industries. Users can buy NFTs without needing to pay in-full upfront.

• Borrowers can either purchase the NFT outright once they can afford to, or sell if price appreciates and keep the profits.

  k

Traction

Whether due to airdrop incentives (absolutely), general degeneracy (ofc), or most likely a blend of the two (kek), Blur has already facilitated significant loan volume through their new platform.

• Within 24 hours, Blend facilitated over 500 loans worth over a total of 5,700 ETH (in comparison, NFTfi’s daily loan volume was 328 ETH).

• Within 3 hours of the launch, the platform’s trading volume doubled from 5,175.99 ETH to 11,010.77 ETH.

  _{Source: Blockworks}

Mind you this is with only 3 NFT collections currently supported - Cryptopunks, Azuki and Milady.

Now why might traction have been so strong? Could it be the impressive levels of gas optimization? Could it be the innovative perpetual loans and refinancing mechanism? Perhaps it’s the zero fees for 180 days?

Or maybe, just maybe…

With Season 2 of the $BLUR airdrop anticipated later this month, lending points are included as a new addition. Create loan offers using ETH, and ye shall receive lending points.

Platform data shows these humble farmers have been hard at work, with multiple zero interest loans being offered (so generous 😍). A sexy product launch and significant loan volume didn’t pump the price like you might expect either, with $BLUR down 9% in the 24 hours post-launch.

Concerned individuals have been quick to point out the risks involved with increased financialization, leverage, and volatility into an already hyper speculative market. NFTs were the gateway drug for retail last cycle, but this kind of market highly favors whales and sophisticated traders who can avoid or absorb liquidation losses, not desperate NFT flippers. Just like the Season One airdrop where demand for Blur bid points became greater than the demand for NFTs themselves, it’s reasonable to assume we will again see this unsustainable market dynamic repeat itself.

In my opinion, NFTfi is not just vapor, but a truly exciting innovation. With the potential to help realize an actual mainstream use-case for crypto as non-fungible tokens are made liquid. If you lose your house leveraging long on a Milady, you don’t have anyone to blame but yourself.

The market is a democracy, and we should let people vote how they want…

Stay safu though. Educate yourself and know what you’re getting yourself into!

The Big Picture

For all the NFTfi Summer memes, NFTfi is clearly a market with legs. Still in its infancy, cumulative borrow volume has already exceeded $1 billion.

We could very well be looking at the next bull-run catalyste here, luring retail back into the fold next cycle.

After disrupting the NFT marketplace sector and ruffling OpenSea’s feathers, Blur now faces a new set of competitors in the NFT lending space.

What do you think? Will Pacman eat up the competition?

_{Want to get caught up on everything NFTfi? Stay tuned. We’ve written a 3-part NFTfi ecosystem deep dive, to be published in the coming weeks} 😎

🦎 TODAY’S SPONSOR - NATIVE

Native is building crypto’s invisible DEX layer. It turns exchange into a feature any app can add in 1 day, fixing the swap experience for average users and solving token management for project teams.

What does this actually mean? It means that projects now have the tools to create THEIR OWN in-app DEX, allowing them to transact directly with their community! For example, let’s say I was the Founder of NFTitties and I wanted to create my own DEX… let’s call it TittySwap. Would that be possible? Yes, it’s already been done!

So how can you get exposure to Native?

🚨 From May 1st - May 15th, Native is launching a trading competition, where you can earn 1 of 4 tiered NFTs that will play a SIGNIFICANT role in their governance token distribution… 👀

There are two competitions running now, Clash of the Traders, and DEX Duels. To join is simple - participate actively across Native’s social media (Twitter, Telegram and Discord), trade on any of the available DEXes created through Native, or even create your own DEX!

🦎 Visit the Native website for more details.

🚀 SUI HAS ENTERED THE CHAT

Sui mainnet is now live.

Mainnet launch completes a multi-year development process for Mysten Labs, as Sui officially enters the competitive arena of high-performance Layer 1 blockchains.

In this article, we provide a summary of Sui and its launch, with a focus on its technology and tokenomics.

Table of Contents

1. Summary

   1. Background

   2. Tech

   3. Tokenomics

2. Traction and $SUI Performance

   1. Traction

   2. $SUI Performance

3. Final Thoughts

Sui, Summarized

We’ll provide you with the cliff notes summary, but for an in-depth guide, check out Messari’s latest article on Sui, covering the L1 blockchain in great detail.

Summary

Background

• A brand new L1, Sui aims to offer a highly scalable and secure blockchain.

• Sui’s origins trace back to Facebook’s 2019 Diem Association (prev. Libra Association). Diem shut down in January 2022, but rising from the ashes were two separate blockchains - Aptos and Sui.

• Mysten Labs, founded in 2021 by the former project-leads of Facebook’s digital wallet, was involved in the project from its inception. That December, a16z led Mysten’s $36m Series A. This was followed by an FTX Ventures-led $300m Series B round in September 2022.

  • The Series B round was at a valuation of >$2b.

  • These rounds were limited to the sale of equity, with no $SUI tokens offered.

  • Following FTX’s collapse, Mysten Labs completed a repurchase of FTX’s equity stake for approximately $96m.

• Overall, Sui’s goal is to be a more user and developer-friendly platform that can compete with other high-performance L1s like Solana, Aptos and Sei.

Tech

• Sui delivers a web2-style front-end experience.

• Simple transactions like peer-to-peer transfers and NFT mass mints do not undergo consensus, allowing validators to process ~300,000 transfers/simple transactions per second (in ideal testing environments).

  • Throughput is “horizontally scalable”, meaning network throughput grows as more computing power is added to each validator. This is achieved through sharding and parallel processing, allowing the platform to handle large volumes of transactions without slowing down.

  • Move, Sui’s programming language, has built-in safety properties that prevent certain types of hacks/exploits.

  • Sui uses an object-centric data model that enables efficient handling of complex data structures and supports easy integration with existing data systems. This model is designed to make it easier to write smart contracts as it allows developers to work with objects and relationships rather than raw data.

• Sui uses a Delegated Proof-of-Stake consensus mechanism (DPoS), allowing for fast block times and high transaction throughput while maintaining security.

• To ensure that the network remains scalable, Sui uses a system of programmable transaction blocks (PTBs) to abstract away gas fees and make transactions more affordable. This gas fee model separates computational gas fees from storage fees, and includes a storage fund to incentivize users to free up storage space when it's not being used.

  • Programmable transaction blocks (PTBs) allow developers to define custom gas fees and other parameters for transactions, making it easier to build more complex and efficient applications.

Tokenomics

• Sui has a fixed max supply of 10 billion, with liquidity/vesting schedules yet to be defined.

  • Community Reserve: 50%.

    • The Sui Foundation will control 5 billion $SUI, with the goal of distributing it via community programs.

  • Early Contributors: 20%.

    • 2 billion $SUI to be distributed to Sui’s R&D teams (namely Mysten Labs).

  • Mysten Labs Treasury: 10%

  • Community Access Program and App Testers: 6%

    • Includes a “Recognition Sale” (whitelisted public sale) for early Sui community members (gauged via Discord activity).

    • Includes a General Sale, open to the public.

Unlike rival Aptos, Sui didn’t provide an airdrop.

Traction & $SUI Performance

Traction

The Suit team asserts that more than 200 dApps are set to go live in the coming weeks, spannings NFTs, DeFi, social media and gaming.

With mainnet so fresh, let’s dig into Sui’s “Permanent Testnet” stats.

• Sui Explorer: 117,000 DAU

• Sui Wallet: 1.09 million WAU and an all-time high of 794,000 DAU

• Total transactions: 286.23 million

• Current TPS: ~315

• Total packages published: ~125,949

• Total Validators: 97 (2 by Mysten Labs + 95 by other entities)

• Total stake delegation operations: 7.35 million (Wave 2 Testnet)

$SUI Performance

• Soon after mainnet launch, $SUI was listed on various exchanges including Binance, OKX, Bybit & Kucoin.

• $SUI debuted at around $4.52, but has since experienced a nearly 70% decline settling at around $1.30 at the time of writing.

Final Thoughts

In my opinion, the race for L1 dominance is far from over, and more competition is only a good thing for users and developers alike.

Sui’s mainnet launch comes at a very interesting time, where rising gas fees on Ethereum saw usage of EVM-compatible blockchains hit a new all-time-high last week.

April 25 saw record user activity on EVM-compatible blockchains, as daily new unique addresses hit 6.77 million across L1s including BNB Chain, Polygon and Avalanche. The previous record was 6.74 million in 2021.

This surge has been spurred on by Ethereum’s prohibitive gas fees. According to The Block’s Data Dashboard, gas fees on Ethereum have increased by over 250% since the beginning of the year to around $9 per transaction, up from about $2.50 per transaction in December.

Sui is not EVM-compatible, but Solana showed last bull szn that speculators could care less. Memecoins remain crypto’s leading use-case, and ain’t nobody got time for those gas fees on Ethereum.

🧠 EVERYTHING ELSE

BRC-20, Gitcoin goes woke, OG protocols stay shippin’

🟠 BRC-20 Moons

• BRC-20, the Bitcoin token standard created in early March, went absolutely bananas this week.

• Market cap is currently sitting at ~$278m, a 14x rise over the past week.

• Transaction volume surged to a high of 366k yesterday, overtaking standard BTC transactions on the network

  

  Source: @cryptokoryo Dune Dashboard

🥴 Gitcoin goes woke

In a permissionless industry where identity is largely unknown or irrelevant, Gitcoin goes full retard.

As usual, under the guise of benevolent ideology lies a hidden agenda. Blu3dao was granted grifted their way into a free $256k, courtesy of Daphne from blu3dao sitting on the board of grant reviewers 🤡

💪 OG protocols stay shippin’

• Uniswap launches Agora, a governance interface for delegates to build profiles & match with other relevant delegates.

• Curve deploys its crvUSD stableceoin on Sepolia testnet. crvUSD uses the Lending-Liquidating AMM Algorithm (LLAMMA).

• Oracle-less perps trading platform GammaSwap is now live on the Goerli testnet.

• Argent launches the Starknet Xplore campaign. Users who complete transactions using Argent X wallet from April 1 to May 9 will receive NFTs as rewards.

Other Interesting Things

• The Ethereum Foundation sells 15,000 ETH

• Balaji settles his $1m BTC bet

• DEI stablecoin hacked

🕵️‍♂️ The Weekly Raid by DeFi Raiders

Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.

🐦 ORANGE FINANCE 

The smart, algorithmic approach to efficient liquidity provision. Orange is an automatic liquidity-management protocol with sophisticated hedging strategies for Uniswap v3 that enables any investor to generate revenues on Uni’s DEX. Basically, this is Uni V3 made simple for everyone.

🐦 DENARII LABS

A protocol-agnostic accelerator powered by HLV and RBV, dedicated to championing and developing the next era of viable web3 ventures. Denarii is dedicated to providing access to tokenomics advisory services, education, mentorship and much more. Denarii is also giving $100k grants to projects accepted to the accelerator program.

📜 Medium Article

🐦 SPARK PROTOCOL

Growth-focused arm of the Maker Protocol. The first product builds upon Aave V3 to bring the best lending market features to Maker.

🐦 ROOT GENESIS

Root Protocol is an Omnichain Governance and Liquidity Aggregation Layer, governed by $ROOT. Root Protocol generates yield by leveraging a multi-token ecosystem, offering various incentives for staking, liquidity provision, and participation in interconnected DeFi services, fostering a sustainable and scalable growth environment.

DEGEN

DYOR, ape at your own risk!

🐦 ARB500: ARB yield aggregator

🐦 zkSTABLE: Decentralized algorithmic stable coin built on zkSync. Transparent and permissionless liquidity protocol to empower DeFi.

🐦 SYPHEX: Anonymous decentralized trading.

🐦 TRISTERO: Building autonomous darkpools. See thread below.

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot finds hundreds of projects per week. OG Hunter of the Alpha, Snake Chain, thanklessly sifts through these to provide you with some of the best 🙏

This week was particularly redacted. 90% was shit like this 😂 

Here’s this weeks’ picks:

🐦 @narativlab - Web3 driven community film funding.

🐦 @michelin3xplore - Official Michelin web3 venture for unique experiences in motorsport, gastronomy, and travel.

🐦 @nocturne_xyz - On-chain privacy for Ethereum.

🐦 @CoinbaseIntExch - Coinbase International Exchange.

🎙 Hunting for Alpha Recap

Loooots of alpha spilled on the pod this week.

🕵️‍♂️ INTELLIGENCE ON CHAIN

In 2022 $1.2 Billion Dollars was stolen from the crypto ecosystem in hacks. In this episode with Intelligence On Chain, the team discusses their detective work in crypto and how everyday users can make their wallets safer while navigating the ecosystem.

🔊 Listen to the full episode now.

EPISODE SUMMARY

• Intelligence on Chain provides objective research and investigations in the crypto space.

• IOC explains how investigations usually start - understanding where the funds were stolen from and determining how it happened.

• IOC talks about the importance of having a large network and using tools like breadcrumbs.app to track transactions on the blockchain.

• IOC gives a brief overview of the Beanstalk exploit and how they plan to rectify the situation.

• IOC discusses how law enforcement deals work with these types of situations and mentions a few cases they have worked on, including a Binance developer stealing $370,000 worth of bitcoin and the Beanstalk Farms DAO $78m exploit.

• They also mention the challenges of investigating cases that involve Tornado Cash, a tumbler which mixes money with other people's money to obfuscate transactions.

🦎 NATIVE

Next up was Crypto Meina, founder of Native.

The episode contains a discussion of various topics, including Native's role as an invisible DEX layer for the crypto space, the benefits for individuals and protocols (e.g. unlocking new revenue streams), the seamless UI/UX experience, and their flexible market making pricing model. The interview also includes a discussion of Native's partnerships with leading market makers, their community engagement efforts, and plans for the future.

Native is currently running a trading competition to determine governance token allocation 🪂🪂🪂

🔊 Listen to the full episode now. 

EPISODE SUMMARY

• Native is the invisible DEX layer for the crypto space.

• Using Native, any project in the web3 space can create their own DEX within five minutes.

• Native combines the capital efficiency of a centralized exchange with the security and decentralization of a DEX.

• With their partner market makers, Native helps projects boost their liquidity.

• Native is the "plumber" of the web3 space, providing fundamental financial infrastructure.

• Native charges no protocol fees to use their services, giving projects the ability to keep 100% of transaction fees.

• Native's seamless UI/UX experience enables projects to optimize user experience.

• Native is constantly exploring new on-chain technologies to integrate into their flexible market making pricing model.

• Native wants to empower the next generation of DEXs, growing together within the web3 space.

 🏹 Community Updates

💪 Community Alpha

Every Monday our community holds a community call to trade alpha and talk shop. These calls are private so details will be omitted, but here are some of the topics discussed this week:

Aggregators > DEXs
Thesis: The reason aggregation wins is because the amount of orders in the DEX space are 80% aggregated. If you’re an LP, you want to be in the pools that get routed. It’s much easier to aggregate than to be a DEX, having to compete constantly and provide liquidity all the time. Aggregators are also more future proof - you can always add the next big Perp DEX.

Will Sui pull a Solana? 
Prediction: Sui might do more of an Aptos - pumps, people FUD and dump, but then realize it’s actually solid and price slowly climbs again. It’s actually quite a good L1, with a nice consensus mechanism.

Will the BTC halving be bullish? Prior to the last one we bottomed out before zooming up. DCA’ing from the end of this dip into majors could be the move, then increase risk tolerance as we move up.

Blur and pacman are super degen.

• Blend is probably going to rek a lot of NFTfi protocols. Still, there will be less risky deals beyond Blur.

• If you want good LTV you need peer-to-peer which is why nftfi.com is doing well, but no-one wants to wait for loan approval. You can’t get good LTV with P2P though, which is why Spice will kill it with their classifier feature.

• Blur can do illegal things with their token that OpenSea just can’t do. This opens speculation and fee sharing with a token. You’re gonna see big threading accounts with Blur bags posting hopium 24/7. They will keep doing that as new products from Blur comes out.

• That speculation keeps them beating OpenSea, and when the normies come back it’s gonna take off. No one is going to write threads about OpenSea because there’s no token to speculate on. Normies will thus hear more about Blur than OpenSea.

• Collections will probably move there too because they can’t collect royalties, and it’s another revenue stream using AMMs.

• Could we see a rotation from meme coins to an NFTfi meta? What will catch a bid? In general, a safe move is probably to just lend. A prologue NFT from Spice, paid out in ETH, is a really good way to get safe exposure.

• There’s always a new meta. Last time it was open edition NFTs, then there was the Owls wave. You’ll see a project do well out of nowhere, then see 4 or 5 derivatives, and it just keeps cycling every week.

• Miladys / Remilios always hopping onto NFTfi protocols early. Blend, nftperp, abacus etc.

And that’s all for this week.

Until next time,

Sending Alpha 🥂

Thanks again to our sponsor Native. Native is crypto’s invisible DEX layer, turning exchange into a feature any app can add in 1 day. See for yourself at native.org.

_{Hunting Alpha is an exclusive community for the next generation of alpha hunters. Check out what we’re building here.}