📬 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 23-30)

BTC $29,197 (+5.4% 7D)
ETH $1,912 (-2.8% 7D)
BTC Dominance 45.9%

… Yeah, I don’t think those numbers paint the full picture.

Here’s how it went down:

After soaring more than 6% intraday on Wednesday, the price of Bitcoin seemingly fell off a cliff. BTC fell 8% from $29,800 to an intra-day low of $27,324 in the span of just one hour.

Initial explanations for the dump were that the market was spooked by an alert from Arkham Intelligence signalling the movement of funds from of Mt. Gox and U.S. Government wallets.

However, that myth was swiftly debunked. Arkham showed that the alerts were sent at 20:07 UTC and 20:08 UTC and therefore could not be responsible for the Bitcoin’s price drop.

So what gives?

A mix of factors likely contributed to BTC’s whipsaw price action this week. The market has been less liquid than usual this week, which it appears some entities are taking advantage of.

A $150M spot bid on Wednesday led to a $1.5B derivatives bid, liquidating the filthy bears and driving price up to a strong price resistance at $30,000. This level is significant, as it represents the point where a large portion of the market recovers above break-even price after nearly a year of being underwater (Michael Saylor included).

The bulls’ bid wasn’t sustained past $30K, and when the spot bid ceased, the show was over and positions were puked. BTC aggregated open interest was cleared from $9.5B to $8B in just one hour, with a total of $350M liquidated within 24 hours.

Stay safe everyone.

Pro tip: Don’t trade LTFs in an uncertain market regime (like this one).

📜 Stories of the Week

Here’s the top stories unfolding right now.

🙏 _{I tried to be succinct but DAMN it was a big week}

💀 THE BANKING CRISIS ISN’T OVER… 

It’s only just begun. First Republic is the latest domino to fall.

In case you missed it, there was a crisis among US Regional Banks last month (also known as the banks that are not “too big to fail”). How did we end up in this position?

Well, after the COVID stimmies airdrop these Regional Banks were flooded with excess deposits. Hurrah! Now they just had to choose where to earn yield: investing in treasuries (safu), or making loans (risky). To the dismay of all our weird uncles with terrible business ideas, these banks decided the US Government had less credit-risk (sorry Uncle Joe).

However, with rates near zero, banks needed to juice their yields. They invested in longer-term treasury bonds, taking on greater duration risk for greater returns.

This worked great until it reallyyy didn’t - when J Powell started aggressively hiking interest rates, the value of these bonds plummeted. Banks that were overexposed found themselves sitting on significant unrealized losses, resulting in a liquidity crunch when depositors decided to withdraw their money. First Silvergate experienced this, then came Silicon Valley Bank, and now we find ourselves here (new VC value-add unlocked: blow up your portco’s primary bank by spreading FUD 📈).

Fortunately, the FDIC came to the rescue and guaranteed depositors. Crisis averted, right?

Well, not really. Chances are you have heard something is going on with First Republic right now. If you’re anything like me you may also be wondering… what the fuck is First Republic?

And more importantly… why should I care?

There is some incredible content out there breaking down the larger implications of this situation in detail (links below), but here is my smooth-brain summary:

• The entire US regional banking sector has some variation of similar issues to SVB and Silvergate. The Fed and US Treasury know this, and have used these blow-ups to implement a partial solution to the systemic issues (the Bank Term Funding Program). Oh, and by a partial solution I mean an implicit print of $4.4 trillion (Arthur Hayes’ words not mine).

• This gigantic injection of liquidity was something the Fed already needed to do, but made politically expedient by being able to blame it on crypto (Silvergate) and tech bros (SVB). First Republic is the latest Regional Bank to face the firing squad. What the FDIC will do here remains to be seen.

• With a hole of tens of billions of dollars on First Republic’s Balance Sheet, somebody has to bear the loss. The FDIC really faces three not-so-great choices:

  1. Seize First Republic at a loss and let uninsured depositors take the L, reigniting questions about such deposits at other regional banks;

  2. Seize First Republic at a loss and have the FDIC fill the hole, declaring First Republic systematically important (using its deposit insurance fund to pay off the uninsured depositors), and be accused of bailing out Wall Street;

  3. Or do nothing and let First Republic (and banks in the same position) become unprofitable Zombie Banks indefinitely.

… and THIS is why everyone is paying close attention to First Republic. This is a political decision with widespread consequences. If First Republic fails, and depositors are left holding the bag, this contagion will spread through all Regional Banks facing the same issues. But if the FDIC takes over and Janet Yellen deems First Republic systemically important, it sends a signal that the US Government will back the entire US banking deposit base.

SHEESH 🍿🍿🍿 

If you want to learn more, check out Arthur Hayes’ latest thread (Apr 26), Kaiseki (Arthur Hayes Blog Post), and First Republic is in Limbo (Matt Levine)

🦎 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.

😳 THE DOLLAR IN DECLINE?

Between the clusterfuck in the US Regional Banking sector, hostility and lack of clarity from regulators, and the squeeze everyday people are feeling from rising inflation, anti-dollar sentiment is at an all-time high.

Foreign nations & crypto powerbrokers alike smell blood, and just about everyone is on the offensive.

Crypto Powerbrokers put on their big boy pants

Raise your hands to the (debt) ceiling!

Foreign Nations make their move

The community is fed up too

Regulators gonna regulate

🧠 EVERYTHING ELSE

Merlin Rug, trending narratives, and other interesting things.

🧙‍♂️ Merlin DEX Rugged by Founders

This was a weird one.

Merlin DEX, supposed to be a Camelot fork on zkSync, was rugged this week by the founding devs shortly after its public sale began for over $1.8m.

What made this a particularly unusual incident is the amount of effort and sophistication that went into pulling it off. This wasn’t just some random unaudited fork that ran away with the funds from a public sale. This project had already raised a seed round from many noteworthy crypto founders and alpha groups, deceived and recruited help from some of these individuals, and had just passed a security audit from CertiK. Despite ALL this, less than a day after the public sale began, the founding developers went rogue and drained the protocol’s liquidity pools.

Atlas (who to be clear, is not at fault here), was recruited at the last minute by the two founders to revamp their janky tokenomics, as well as do BD & marketing. Read his full thread that documents the series of events that led to this situation 🧵

Naturally, a lot of people are outraged at CertiK for doing a shoddy audit job. Most of us can’t read code, so we rely on these auditing firms to be up to scratch. Certik addressed the incident in a statement pointing to a “private key management issue” as the cause, but those who checked the code themselves suggest that this was a ridiculous oversight by CertiK.

Merlin and CertiK plan to compensate users impacted, and are collaborating with law enforcement to track down the founders if direct negotiation fails.

Just about everyone was fooled by this one. All except for one individual…

🧙‍♂️ A magician never reveals his secrets.

🔥 Trending Narratives

Memecoins again

Memecoins have been hot for a while now, but we won’t be giving them extra attention for the time being. See why 👇

Stay safu.

NFTfi Summer?

👀

milady.

Liquid Staking

Liquid staking overtook DEXs to become largest category in DeFi 😯

So who’s buying?

Interestingly, Lido dominates the portfolios of some of the largest VC funds in the industry:

• Paradigm Capital: holds over $350m of on-chain assets, with roughly 55% in Ethereum and 45% in Lido.

• Dragonfly Capital: holds over $150m on-chain, split roughly between:

  • 30% Lido

  • 30% stablecoins

  • 15% ETH

  • 15% Bitget

  • 5% Frax

  • 5% Ribbon

_{Analysis: 2036 newsletter}

Someone bucking the trend is Arthur Hayes, who dumped his Lido position ahead of Shapella. He outlined his reason for doing so in a recent BitMEX blog post.

Other Interesting Things

• Circle launches cross-chain transfer protocol for USDC

• Everything you need to know about Aave and their GHO stablecoin

• Dune Analytics API is now live for all users

• Apple's 30% Tax Mandate on iOS Is Illegal, Judge Affirms—And That Could Be Good for Crypto, NFTs

• Sui Network to Issue Token Following Exchange Sale; Airdrop Hunters Dismayed

• Voyager Creditors down bad as Binance terminates Asset Purchase Agreement

🕵️‍♂️ The Weekly Raid by DeFi Raiders

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

🐦 PSY STABLECOIN

PSY is a stablecoin that will enable high leverage and stable utilities with highly scalable LSD collaterals.

Why does this matter? With the Shanghai upgrades, LSDs are one of the hottest narratives right now. Plus, with recent issues surrounding centralized stablecoins, users are looking for more decentralized options for their stables. We don’t know if an LSD collateralized stable is here to stay, but this is definitely worth paying attention to as the LSD narrative unfolds.

Check out the docs here.

🧵 A thread on PSY:

🐦 ARRAY

Array is a Multichain Real Yield Launchpad Integrated DEX & Venture Fund.

They offer access to future IDOs through the minting of their NFT without having to hold their token. They have also partnered with Kromatika and SyncSwap for their integrated DEXs. Very much worth keeping an eye on this project.

🧵 Great thread on Array from Linn:

🐦 EQUILIBRIA FI

Equilibria is the first yield booster built on top of the now well-known Pendle Finance protocol. With the impressive gains already seen by users on Pendle, Equilibria is aiming to take those gains to new heights. The team is in close communications with the Pendle team, and this could be an exciting one to watch.

DEGEN

DYOR, ape at your own risk!

🐦 BBQ PARTY: Pool Party and Tomb Finance combo. Investments from UDAO and Alfa DAO.

🐦 ASTERISK FI: (3,3) on zkSync. The DEX wars begin on zkSync.

🐦 NEUTROSWAP: Audited community-driven AMM and Launchpad on EOS EVM blockchain.

🐦 GHAST: “Liquidation-Free Lending Market for $USDC, $ETH, and $BTC Delta-Neutral Vaults.

Leverage to boost your $GLP Yield by 195%”

💎 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 🙏

🐦 @rhinestonewtf: Account abstraction

🐦 @EnLight_Fi: LSDfi project building on LayerZero

🐦 @ditto_hq: DeFi native NFT liquidity

🐦 @rainshowerlabs: Undercollateralized lending

🎙 Hunting for Alpha Recap

Last month Artemis interviewed the guys from Yama Finance to discuss their Omnichain Stablecoin, the underlying mechanisms, and how it can be used to facilitate extremely high leverage.

EPISODE SUMMARY

• YAMA is an omni-chain stablecoin that provides high stablecoin yields with risk-adjusted returns.

• Yama Finance aims to provide the highest leverage out of any stablecoin out there and has very high liquidity relative to market cap.

• They provide zero fee, zero slippage swaps between YAMA and USDC and has a peg-stability module (PSM) that incentivizes liquidity.

• YAMA is omni-chain, meaning it can provide exposure to new chains and bypass any time-locked bridges.

• There are no plans to have a token at the start and the system has been designed in such a way that it can pay out three-digit APRs to borrowers and two-digit APRs to lenders without the need to print a token.

• The team is interested in integrating with lending protocols, GLP-like systems, and betting protocols.

• Yama Finance is bullish on Fuel and Eclipse chains, and are keeping an eye on zkEVM chains like Scroll, and also Sui and Berachain.

• Yama aims to be the leverage layer on top of all the existing protocols that are building on top of GLP.

• They are interested in supporting GLP systems and have already announced a partnership with Arcadeum, a betting protocol on Arbitrum that is built on GLP.

• Yama Finance believes the way forward is to piggyback off USDC liquidity, provide one-to-one swaps to/from USDC, and then build a product that's really good so that there's a chance that in the future it can overtake USDT.

BONUS CONTENT!

While we’re on the subject of Omnichain Stablecoins, our resident duck Ali just penned a brilliant deep-dive on two Omnichain Money Markets projects, Radiant and TapiocaDAO.

🧵 Omnichain Money Markets: TapiocaDAO vs. Radiant:

🌐 Check out the full article on our website.

👥 Community Updates

💪 Community Alpha

This community COOKS. Here’s the latest 👩‍🍳

‍😻 VaeVictus from SpiralDAO 

🎁 Spiral DAO airdrop (phase one) is live today!

If you missed it, you can still join for phase two 😄 Check if you’re available 👇

📝 Spiral DAO also released a sweet article outlining their vision - check it out!

👨‍💻 Eichenkundiger from abacus.wtf

After months of development, the new version of abacus went live this week 🥳 Right now people are able to borrow against their Lil Pudgys and Remilio Babies, with pools for Miladys, rektguys and honey jar opening tomorrow 💦 

🎤 Crypto Meina, founder of Native Finance

This week Native announced the completion of their seed round, successfully raising $2M led by Nomad Capital 🔥 

🍯 And last but not least, congrats to Smonkey and the Beras for closing a huge raise of $42.0M (ofc) 🍁

👏👏👏

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.}