📬 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 $26,796 (-3.42% 7D)
ETH $1,871 (-1.18% 7D)
BTC Dominance 47.41% (-1.60% 7D)

Weekly prices for BTC and ETH remained relatively flat week-over-week, with 30D price volatility reaching historic lows (annualised rate of 32% vs. historical average of 71%).

Waning retail interest in crypto, compounded by regulatory uncertainty has continued to erode sector liquidity, as evidenced by consecutive monthly declines in CEX and DEX volume since March.

BTC Dominance has previously behaved similarly in this range, as has RSI. Each time we topped out, RSI moved higher and higher before dropping hard. However, this time is different - RSI has formed a falling wedge and looks indecisive. As RSI has already fallen significantly, there may be room for a spike upwards along with price.

• Total Stablecoin Market Cap has fallen from $137.79b to $129.09b since Jan 1, with the largest reduction in supply ($12 billion) coming from whales with an address balance of over $1m. In contrast, Tether’s market cap has skyrocketed, increasing by $17 billion from $66 billion to an all-time-high of $83 billion. This surge has pushed USDT’s market share up to 64.4%.

• According to Galaxy Research, the number of crypto VC deals and capital has declined by 75% from its peak.

Macro Update:

• US Congress has passed legislation to lift the nation’s debt ceiling, suspending the debt limit until 2025. This move comes just two days before the Treasury Department warned the country would start running short of cash.

• Philadelphia Fed President Patrick Harker noted that “skipping a rate hike” during the upcoming June meeting would allow the central bank to “see more data”. 👀

• In his latest article, Arthur Hayes predicts risk assets go ‘up-only’ in late Q3-Q4. You can find a good thread summary here.

📝 Weekly News

Here’s the top stories unfolding right now:

• The SEC sues Binance, taking them to court for allegedly violating federal securities laws.

  • The filing included a hilarious 2018 quote from Binance’s Chief Compliance Officer, stating “we are operating as a fking unlicensed securities exchange in the USA bro.”

  • Binance clapped back with their official response to the SEC’s complaint, accusing it of aiming to ‘unilaterally define crypto market structure’ .

• Users of Atomic Wallet (a non-custodial decentralised wallet) were hacked for an estimated $35m on June 2nd.

  • ZachXBT found that five users took the worst hit, accounting for $17m worth of stolen assets.

• TriCrypto-NG launched May 31st! The main new feature is bespoke gas savings, up to 50%.

  • Like crvUSD, TriCrypto-NG may be live, but much work is still to be done. Curve’s launches are very much ‘tests in production’.

  • 🧵 Thread explainer of TriCrypto-NG

• Tenet Protocol launches Eva Crypto Wallet on the Apple Store. Eva is multi-chain and non-custodial, no key management required.

• After successfully launching gas monetisation, Fantom releases their 2023 Roadmap.

• PlutusDAO reveals the details of their $plsARB airdrop, airdropping (300k $ARB worth of $plsARB to be airdropped).

• Redacted is working on Hidden Hand v2.

• $150k revenue to be distributed among BetSwirl stakers when $BETS staking goes live.

• Sam Kazemian drops frxETH v2 thread.

• Curve DAO approves wstETH market with 150M crvUSD debt ceiling.

• Japan’s largest bank announces it will be launching a native bank-backed stablecoin on Ethereum, Polygon, Avalanche and Cosmos

• Hong Kong is positioning itself as a digital asset hub with its new ‘Hong Kong Virtual Assets Consortium’ (KHVAC), establishing itself as a regional ratings & index service. Retail trading regulations went live on June 1st.

• US House Republicans propose a bill that may give crypto assets a path to becoming commodities.

• JPMorgan and six Indian banks will collaborate to settle interbank dollar transactions on the Onyx blockchain platform.

💓 PULSECHAIN & THE CULT OF RICHARD HEART

Richard Heart is one of the most polarising figures in all of crypto. In this story, my intention is to present both the bull and bear-case for PulseChain without bias. Not financial advice, DYOR!

So… what the hell is PulseChain?

After nearly two years since its $670 million “sacrifice phase” token presale, Richard Heart’s latest innovation, PulseChain, finally launched on May 13th.

In a nutshell, PulseChain is essentially an Ethereum fork (which we’ll refer to as Pulse from now on).

However, unlike other forks, this new L1 forked the entire state of the network. This means that all the account balances, smart contracts, transaction history, and other data from the original Ethereum network were duplicated in the new network.

This approach has set the stage for one of the wildest experiments we’ve seen yet. By duplicating the entire state, all ERC-20 tokens and NFTs on Ethereum have been replicated on the Pulse network, effectively airdropping all ETH users a free copy of their assets. These cloned assets are in the form of Pulse’s native token standard PRC-20, which currently have zero value (with the exception of the HEX ERC-20 clone, pHEX). It remains to be seen whether this incentivisation scheme will actually work, but it will certainly be interesting to see how these tokens are ultimately valued.

Pulse was created as a horizontal scaling solution to Ethereum. Its goal is to distribute the load on a faster and more affordable blockchain.

To use an analogy, if Ethereum were a McDonald’s overflowing with customers, Pulse would be another McDonald’s built next door. Its aim is not to “solve” Ethereum’s scaling issues, but rather to ease congestion by sharing the load. If the network attracts enough users and the price of PLS increases significantly, it will inevitably run into the same problems. After all, if everyone wants their 2am chicken nuggies, two McDonald’s won’t be able to hold them!

The blockchain itself brings near-zero technical innovation, which is ironic as the launch coincides with the roll-out of high-performance L1s that have spent years in development. Richard knows damn well that the market doesn’t care about your zk-plasma-spheroidal-AI-Omnichain-roll-up solution. It’s all about the narrative baby, and time-and-time again the apes have shown they do NOT care about whatever the f*ck it is these nerds are conjuring up. These gamblers want stupid memecoins like PEPE, and can barely hold onto their own seedphrases. I mean ffs, the winners of the last cycle were DOGE and SHIBA 🤪 

Is this a sad indictment on humanity? Perhaps. Nevertheless, it’s the reality we face. Pulse accepts this fundamental truth and embraces it like an old friend. The true innovation here lies in the ponzinomics, bolstered by the strength of a humongous cult following.

To fully grasp the ponzinomics, let’s first delve into the other pillars of the Ricardo empire.

PulseX (DEX)

Along with the the launch of its mainnet, Pulse also introduced its own DEX called PulseX. Fueled by the FOMO of missing out on the PulseChain presale, the “sacrifice” for PulseX was even juicer, to the tune of $1.03 billion in total.

Combined with the other sacrifice funds raised, the total amount comes to a staggering $1.7 billion 🤯

Pulse (PLS) and PulseX (PLSX) have incredibly large token supplies, with 135 trillion PLS and 143 trillion PLSX total supply respectively. However, they are both deflationary from day one and designed to rapidly burn supply. PLS serves as the gas token for the network (2.2B PLS burned), but the real pyromaniac here is PLSX, with 118B PLSX burned.

Here’s a breakdown of the ponzinomics innovation in PulseX:

The PulseX AMM is built on a “buy-and-burn” feature, which incinerates supply. Users pay a 0.29% fee on every swap, 21% of which is then used to buy and burn PLSX tokens from the available supply within the LP.

Additionally, users are incentivised to provide liquidity and stake LP tokens to earn farming rewards in the form of “Incentive Tokens” (INC). The supply of these tokens gradually inflates, albeit from a much lower base (current supply of 1.79 million). Although the purpose of these tokens isn’t known yet, as you can see above they are being valued quite highly. This highlights a critical point about the Richard Heart casino: all tokens in the ecosystem are tightly liquidity bonded, meaning they move together. As PLSX supply continues to burn, it should have the effect of pulling up PLS, INC, and HEX with it.

One last critical thing to mention is the “OA”, or “Origin Address”. Nobody knows who the OA is. It could be anyone… but let’s face it, it’s most likely Richard. The OA basically plays the role of Satoshi Nakamoto, a benevolent whale who owns most of the tokens but never sells. However, thes OA owns way more of the supply than Satoshi ever did. Nakamoto’s holdings represent 5% of all BTC to be created, whereas the OA owns 88.9% of the PLS supply, 85.3% of the PLSX supply, and 86.7% of the HEX supply.

If you assume that the OA has your best interests at heart, then you can effectively exclude OA-owned tokens from the supply because they will never be sold. There’s even a chance that they might get burnt someday (although this is pure conjecture). This would adjust the supply to 15 trillion PLS, 21 trillion PLSX, and 86 billion HEX.

On the other hand, if you assume the OA wants to dump on you… well then you’re utterly f*cked. Depending on who you talk to, this could either sbe uper bullish for price action or the most egregious example of centralisation we’ve ever seen, setting the stage for a $1.7 billion rug-pull.

We won’t cover HEX in this article, but it’s basically the ecosystem’s store-of-value token that launched back in December 2019. HEX had the same OA dynamic, but so far no rug-pull. Make of that what you will.

Traction

It’s been over two weeks since the launch of PulseChain, so how has it performed? Despite a few bumps in the road, overall the platform has made quite an impact.

The Bull-Case for PulseChain:

• Despite no real protocols built on top (besides the DEX), Pulse’s volume has been high.

• Low gas-fees and fast transactions offer a viable alternative to Ethereum, which should be highly appealing to retail participants next cycle. BSC has already proven that a simple Ethereum fork can be highly valuable.

• The Highest of Stakes movie could spark FOMO among millions of viewers if it does a deal with a top streaming service (which why wouldn’t it?)

• Pulse has firmly entrenched itself as a top 10 chain, holding its own among alt-L1s and even briefly surpassing the blue-chips.

• Bonded liquidity creates network effects and stickiness across the ecosystem. As the buy-and-burn feature deflates PLSX supply, resultant price increases should drag the PLS and INC tokens up with it.

• LP rewards may be in a native ponzi coin, but this ponzi coin is backed by a gigantic treasury from the $1.7b combined sacrifices. Although most of this balance was in HEX, the treasury is still significant (~$670m in stablecoins).

• L1s typically dump in their first few months, so price action thus far is unsurprising.

• Listings on centralised exchanges open a new on-ramp for normies that was never available for HEX.

• The OA address didn’t dump HEX, so why would it dump now? Maintaining this assumption removes 88.9% of the PLS supply and 85.3% of PLSX from circulation.

• The real X-factor: the rabid community of dedicated “Hexicans”, who are as passionate about HEX as BTC Maxis are about Bitcoin. They’re in it for the long-haul: with over 120k HEX stakers on Ethereum, and an average stake length of 7.10 years, their loyalty is a rare differentiator.

The Bear-Case for PulseChain:

• If the “OA” dumps on your head, this shit goes to zero.

• Although the tech may be decentralised, the holdings certainly are not. There are plenty of whales available to dump on you.

• The success of the ecosystem could attract heavy scrutiny from regulatory agencies like the SEC.

• Negative narratives about Richard Heart being a scammer could overshadow any positive news about the project.

• This could end up being one of the largest rug-pulls in history.

• The lack of protocols being built on top persists.

• Due to its reputation as a Fiverr-tier, copy-pasta fork, top-tier developers may refuse to migrate to PulseChain.

• Glitches continue across PulseX, the bridge, and eventually the chain itself.

Eric Wall has been a vocal critic of the project for several years. If you’re looking for more bearish perspectives, you can check out his commentary on Twitter.

The Verdict?

Here’s my verdict: fading PulseChain is a mid-wit trap.

CT hates Richard Heart and his big scammer energy, so don’t bother digging any deeper. But in my opinion, CT may be too smart for its own good here. We love to build shit for developers and create esoteric innovations with no mainstream use-cases. There’s an element of superiority bias at work here - the CT community is full of giga-brain intellectuals, and the Hexican community is mostly left-curve, noisy, and tribal. This is actually bullish, in my opinion. I believe it will take over a year before we see real take-off, but eventually, PulseChain will become one of the big winners in the next bull-run.

In Conclusion:

Some Interesting Projects:
NFA, DYOR.

Key Links:

PulseChain - https://pulsechain.com
PulseX - https://pulsex.com
Block Explorer - https://scan.pulsechain.com
Ecosystem Stats - https://plsburn.com

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 one 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.}