📬 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 (June 12 - 19)

BTC $26,434 (+2.20% 7D)
ETH $1,725 (-0.93% 7D)
BTC Dominance 49.71% (+1.07% 7D)

*Accurate as at 19th June, 2am UTC

Following a week of hostile regulatory actions, this week in crypto was similarly volatile. However, unlike the previous week, prices finished the week with a slight positive trend.

The week started off steady with BTC hovering around $26,000 from Sunday the 11th to Wednesday the 14th. However, following the Fed’s announcement to halt interest rate rises, the market took a steep dive. In the space of one hour BTC fell over 4% from $25,877 to $24,813, marking the first time since mid-March Bitcoin has fallen below $25k. Ultimately the support level at $25k held, and the price gradually recovered in the following days. BTC has been trading in the $26,400+ range since Saturday, without any clear momentum in either direction.

The Federal Reserve’s decision to pause rates was widely expected by investors, so it’s likely that this was just one of many factors contributing to investor uncertainty amid an environment of regulatory and macroeconomic unpredictability.

Other notable events this week include the recent announcement of BlackRock filing for a spot ETF, and USDT’s peg coming under pressure. Curve’s 3pool was left with over 60% in USDT, causing it to depeg to $0.998 against USDC and DAI. Tether responded in a blog post claiming this attack may be the result of market manipulation, as it conveniently happened just before their financial figures were released to Coindesk on the same day.

📝 Weekly News

Here’s the top stories unfolding right now:

• BlackRock files for a Spot Bitcoin ETF

  • BlackRock, the world’s largest asset manager, has filed a registration statement with the SEC for a spot BTC exchange-traded fund (ETF). The SEC has rejected all previous proposals for spot BTC ETFs, so this is a development to watch closely.

  • A spot BTC ETF would be huge for US retail adoption, enabling investors to passively gain crypto exposure without having to buy directly.

  • If approved, BlackRock will use Coinbase as its custodian.

• Uniswap unveils v4 vision, releases draft code

  • Two years after the release of v3, Uniswap has unveiled its vision for v4 of the protocol along with an “open-sourced” early version of its draft code (the code is released under a Business Source License, so is really LARPing as open-source).

  • The new iteration enables developers to provide more custom and advanced features to their pools, as well as reducing gas fees for swaps and pool creation.

    Notable features include:

    • Hooks - These Hooks are essentially plugins that will customise how liquidity pools, swaps, fees and LPs interact. These smart contracts enable new possibilities for pools, such as dynamically adjusting fees and setting trading limits.

    • “Singleton” Contract - Instead of every new token pair requiring a new contract, all pools will now be hosted on one smart contract (the singleton contract). This will provide gas savings as swaps no longer need token transfers between pools in different contracts.

    • Flash Accounting - This new system facilitates transfers only on net balances, allowing transactions to be performed internally within the contract before the final balances are settled. This improved efficiency will further reduce gas costs.

Many in the community have commented on the similarities between these new features and what Crocswap (now Ambient) has already built with their DEX. Unlike Uniswap v4, Ambient is truly open-source… which may end up being their downfall. The competition between the two protocols will be an interesting case-study in the perils of open-source vs. licensed software.

• BNB Chain is set to launch their L2 scaling solution June 19th

• Voyager withdrawals are set to resume

  • The bankrupt crypto lender halted deposits and withdrawals in July 2022

  • In a recent court filing, plans were outlined for Voyager to reopen between June 20 and July 5, enabling creditors to withdraw approximately 35% of their crypto holdings

  • To access funds, submit a withdrawal request through the Voyager platform, and within three to seven days the funds will be distributed to you

• Frax shares plans for Fraxchain launch, an Ethereum L2 “hybrid-rollup”.

  • Fraxchain will use both fraud proofs and zero-knowledge proofs.

  • Plans include using frxETH for gas, and distributing protocol-generated fees to veFXS holders.

  • The Frax team hasn’t fully committed to any of these proposed features just yet, but Sam suggests Fraxchain may be ready for deployment by the end of the year.

• Polygon Labs announces Polygon 2.0 roadmap

  • The upgrade includes increased $MATIC utility and seamless usage across Polygon zkEVM, PoS, and Supernets.

• Ethereum restaking protocol Eigenlayer is now live on mainnet

  • The protocol allows those staking ETH to restake on EigenLayer by depositing liquid staking tokens including Lido stETH (stETH), Rocket Pool ETH (rETH) and Coinbase Wrapped Staked ETH (cbETH).

• CoinEx, a Hong Kong-based crypto exchange, has been banned from operating in New York by the city’s Attorney General for “failing to register as a broker-dealer”. Over $1.7m worth of the exchange’s funds have been seized, with $1.1m to be returned to New York investors and $600k to be paid in penalties.

• Blur unlocks ~196 million BLUR tokens, increasing circulating supply by 40% (June 14)

• Sudoswap launches v2 of the protocol. The new iteration includes:

  • On-chain royalties

  • Custom creator settings

  • ERC-1155 support

  • Conditional orders

  • Fee streaming

  • Gas optimizations

• Aave proposal suggest all primary GHO liquidity pools should live on Balancer V2, explaining that BAL incentives will exceed the trading fee revenue generated on other DEXs.

• Aevo, an Options AMM, is now live on mainnet. Anyone can now trade ETH/BTC options & perpsas well as do OTC trading.

• LEVEL Finance perps DEX is now live on Arbitrum

• The Graph begins its migration to Arbitrum

Hashflow exploited for ~$615k

• The team believes the issue is likely an “approve-related issue”, allowing an attacker to transfer approved assets.

• The Hashflow team has advised users to revoke approvals, and provided a list of old contracts for each network that should also have their approvals revoked.

Updates on the SEC vs. Binance and Coinbase lawsuits

RECAP:

ICYMI, on June 5th the SEC threw down the gauntlet at Binance and Coinbase, suing the exchanges for selling unregistered securities (after classifying MATIC, ADA and SOL as securities).

In their filing, the SEC accused Coinbase of operating an unregistered securities exchange, broker-dealers, and clearing agencies since “at least 2019”, despite approving their IPO in 2021.

The lawsuit towards Binance went much further, including allegations of commingling and diverting customer funds, manipulating trading volume of Binance.US, as well as the unregistered offer and sale of Binance’s own tokens (BNB, BUSD and certain crypto-lending products).

Here are the latest updates:

• The SEC has requested a four-month extension to respond to Coinbase’s request for regulatory clarity regarding cryptocurrencies.

• In the SEC’s filing against Binance, it was requested The Courts consider measures “up to and including” asset freezes and repatriation.

  • US District Judge Amy Berman Jackson has ordered the two entities work towards a compromise to avoid a total asset freeze - Binance.US and the SEC are currently in negotiation.

Gud Reads

• Fungible - Arthur Hayes (June 17)

• The Three Transitions - Vitalik (June 9)

• Aave v3 Explained Simply with Diagrams - James Lim (June 4)

• Bridges in the Multi-chain of Madness - An Ape’s Prologue (June 13)

• Dune Digest #84: LSDfi, Ethereum L2, Arbitrum, and Blue Chips - Dune Analytics (June 17)

• A Comprehensive Look at Crypto Funding Rates - Philipp Schulden (June 5)

🕵️‍♂️ The Weekly Raid by DeFi Raiders

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

🐦 Plural - DeFi Insurance.

Insurance possibilities are a necessity for the future growth of DeFi. Whoever is able to build something worth utilizing first could potentially change the level of trust within DeFi.

🐦 Raman Finance - All LSD-backed stablecoin liquidity.

The LSD-backed stablecoin narrative continues to play out.

🐦 Dexilla DAO - Cutting edge orderbook trading engine live on Optimism.

So far, they have gained significant TVL since launch.

🐦 Manta DAO - Decentralized DeFi hub powered by Kujira.

Team Kujira just continues to produce. Anything associated with this team is worth paying attention to, they’re absolutely dominating the Cosmos ecosystem.

🐦 iLend - First native money market on Injective.

There’s lots of growth starting to happen on Injective, so worth following.

🐦 Pepe Rumble - New GameFi project.

Battle Royale style game built on top of casino aspects. Focus is on DeFi with a fun and interactive game using Pepe as the main character.

🐦 Pound Swap - Liquidity book utilizing (3,3) mechanism on zkSync.

The evolution of (3,3) use-cases doesn’t seem to be slowing down, even if the interest has tapered off significantly.

💎 OnlyAlpha™ Weekly Gems

Our Alpha Scraping bot USED TO finds hundreds of projects per week 💀

With a heavy heart, today we lay our dear friend to rest.

Last week our much beloved OnlyAlpha™ bot crossed the Rainbow Bridge, and is hopefully chilling out in Heaven rn.

Tragically, the OnlyAlpha bot has perished at the hands of Elon Musk and Twitter’s API price hike. Previously the API was free and the alpha flowed in abundance, but alas, it’s now priced at $42,000 per month.

Reddit made a similar move recently, and the community has responded with strong protest. Here’s hoping we see similar resistance from the Twitter developer ecosystem, as this new move prices out nearly everyone.

We will always be thankful for the alpha you generously provided for free, but more importantly, for the memories. We promise to remember the good times, especially when you picked out PEPE with under 300 followers 🙏

Cheers for the memories OnlyAlpha™ 🍷

PS - many thanks to Snake Chain for thanklessly sifting through the bot’s picks every week. Appreciate your efforts ser! 🐍

Ⓜ MAKER ENDGAME, EXPLAINED

Guap Granny, the newest addition to the Sending Alpha team, shares her breakdown of the Maker Endgame strategy.

On May 12th Rune Christensen published his detailed plan for MakerDAO’s new roadmap, outlining a vision with the hopes of improving governance. Within crypto’s hectic news cycle, it felt like this news didn’t get the attention it deserves - so what exactly does this bold new plan, “Endgame”, entail for the future of MakerDAO?

Since MakerDAO was announced to be completely decentralised in July 2021, it has continued to fulfill its purpose, which is to provide people with access to an unbiased global currency in the form of the decentralised stablecoin DAI.

As the organisation evolves, the governance of the protocol has become extremely complex and has reached a state of structural inertia. This has further contributed to voter apathy and introduced risks of centralisation. Governance and scope have become increasingly political, inefficient, and unscalable. The budget processes, while functional, lack transparency. Additionally, there are mismatched expectations of the Maker protocol among different stakeholders. These symptoms are evident in recent performance, where the growth of DAI supply has stagnated, and the protocol is no longer profitable.

The Endgame Plan published by MakerDAO aims to address structural inertia and voter apathy in a fundamental way. Essentially, the plan involves creating an immutable incentive framework to establish a self-organising governance equilibrium that enhances decentralisation, participation, efficiency, and risk mitigation.

There are five major launch phases outlined in the plan:

Phase 1: Beta Launch

The first phase involves relaunching the MKR and DAI tokens as two new tokens temporarily named "NewStable" and "NewGovToken." This is done to unify the Maker brand and establish a coherent concept.

The existing DAI and MKR tokens will remain unchanged. DAI holders can upgrade their tokens to NewStable at a 1:1 conversion rate, while MKR holders can convert their tokens to NewGovToken at a fixed rate of 1:1200.

Some of the distinguishing features of the new tokens include increased on-chain liquidity for NewStable compared to DAI from the moment of its launch and a larger supply of NewGovToken to incentivise governance participation.

Phase 2: SubDAO Launch

This phase entails the launch of six smaller specialised DAOs that are connected to the main MakerDAO. Each of these DAOs will have their own genesis governance tokens, and their incentives will be aligned with NewGovToken holders via intertwined economics. The distribution of SubDAO tokens will be exclusively through SubDAO token farms, which will be accessible to NewStable users.

The SubDAOs are divided into two categories: FacilitatorDAO and AllocatorDAO.

FacilitatorDAO comprises a collective of Maker Facilitators who specialise in operating and gamifying the internal governance processes of MakerDAO and the AllocatorDAOs. The FacilitatorDAOs will be held accountable and penalised for any misconduct committed by their selected Facilitators, such as unauthorised protocol access or theft. Initially, there will be two FacilitatorDAOs to promote decentralisation and diversification of core processes.

AllocatorDAOs are responsible for managing and deploying all DAI Collateral. This will streamline the workload for the current Maker Core Unit , completely replacing the necessity for native vaults, PSMs, and D3Ms. This operational efficiency will enable the Maker Core Unit to allocate more resources towards growth and infrastructure, while the AllocatorDAOs can focus on innovation, capital deployment, and the creation of user-friendly DeFi products on a larger scale.

Each SubDAO will possess its own distinctive brand identity while utilising the AI-empowered governance tools provided by MakerDAO.

Phase 3: Governance AI Tools Launch

MakerDAO also plans to launch internal AI tools to systematically update, summarise, and interpret the Alignment Artifacts for the entire Maker ecosystem. The Alignment Artifacts were previously known as "The Maker Constitution and Scope Frameworks," a document outlining the principles and rules that determine the decision-making framework for MakerDAO.

The use of AI to empower its ecosystem intelligence will level the playing field between newer members and Maker OGs by providing them with seamless access to vital information quickly. It will also enable the DAO to accumulate data and enhance its decentralised processes over time.

The development of the Governance AI Tools will be an open-source project titled "The Purpose Fund."

Phase 4: Governance Participation Incentive Launch

This phase entails the introduction of The Sagittarius Lockstake Engine (SLE), a system designed to motivate NewGovToken holders to actively engage in Maker Protocol governance. It achieves this by necessitating users to lock up their NewGovTokens and delegate their voting power. The SLE offers a user-friendly and gamified interface, facilitating easy participation akin to selecting a political party in a multi-party democracy, where voting power is determined by the number of tokens held.

SLE users can receive compensation in the form of NewStable income, equivalent to 30% of the surplus generated by the Maker Protocol, or SubDAO tokens. To foster long-term commitment, the SLE imposes a 15% exit fee.

Phase 5: NewChain Launch and Final Endgame State

The concluding stage of the Endgame plan involves launching a blockchain, serving as a governance backend logic for SubDAO tokenomics and ensuring MakerDAO governance security. This blockchain aims to safeguard Maker users against severe governance attacks.

Conclusion

Endgame represents a comprehensive overhaul of MakerDAO's governance and business operations. Its objective is to introduce a restructuring framework, explicit rules, incentive designs, and AI tools to establish a streamlined decentralised governance system while enabling Maker to scale effectively.

Instead of taking the passive approach hoping more proposals, voting, and temporary fixes will solve things, Maker’s going bold. Rather than risk gradual obsolescence, Maker’s taking large proactive steps towards fixing the fundamental problem of complex governance due to org size, and fulfilling its original vision of true decentralisation.

And that’s all for this week.

Until next time,

Sending Alpha 🥂

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