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The Weekly Hunt #2
All the alpha you need to know (Apr 30).
📬 Today’s Send
📈 Market Movements
📜 Stories of the Week
🕵️♂️ The Weekly Raid by DeFi Raiders
💎 OnlyAlpha Bot Weekly Gems
🎙 Hunting for Alpha Podcast Recaps:
🤑 Yama Finance - Omnichain Stablecoin facilitating extremely high leverage.
✍ BONUS CONTENT - Omnichain Money Markets: TapiocaDAO vs. Radiant
👥 Community Updates
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).
Liquidity has started to vanish which means that it's a lot cheaper to move price now vs 2 weeks ago. If you look closely there are some entities that are taking advantage of this via buying spot, running price into liquidations and then dumping. Previously too expensive to do..
— Avi (@AviFelman)
4:19 PM • Apr 27, 2023
thiccy's thots on btc pa today:
- 150mm spot bid caused 1.5b derivs bid
- tradfi funds probs not bidding spot
- dollar + gold are flat, unlike in March
- toppled later in day when spot bid stopped
- arkham false alert likely no effect on PA
- patient bulls bought dip after— Alex (@thiccythot_)
5:19 AM • Apr 27, 2023
A huge pump and dump. The total open interest of Bitcoin contracts was cleared from 9.5 billion dollars down to just 8 billion dollars. Various crypto contracts faced margin calls with a total of 350 million dollars liquidated within 24 hours - a massive one.
— Jeff Liang (@JeffLia12309881)
4:10 AM • Apr 27, 2023
📜 Stories of the Week
haha yeah, livin’ the dream
Here’s the top stories unfolding right now.
💀 The Banking Crisis Isn’t Over…
😳 The Dollar in Decline?
🧠 Everything Else
1. Merlin Rug
2. Trending Narratives
3. Other Interesting Things
🙏 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:
Seize First Republic at a loss and let uninsured depositors take the L, reigniting questions about such deposits at other regional banks;
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;
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!
😳 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.
The state of things.
Crypto Powerbrokers put on their big boy pants
Coinbase issued their official response to last month’s SEC Wells notice, providing a 13 minute video and 73 page written submission.
The notice applies to certain digital assets listed on Coinbase, Coinbase Earn, Coinbase Prime and Coinbase Wallet.
In the response, Coinbase makes it clear that “nothing has changed” since the SEC allowed them to go public two years ago. Whilst expressing a desire for cooperation and greater clarity, they stood firm stating they will “fiercely defend” themselves in court against any legal action taken.
John Deaton, amici counsel for 75,000 XRP holders in the SEC v. Ripple case, praised Coinbase’s response.
Today, Coinbase is sharing our response to the SEC’s Wells notice from last month. 1/7
— paulgrewal.eth (@iampaulgrewal)
7:32 PM • Apr 27, 2023
Bittrex Global CEO Says Firm Will Fight SEC Charges, Did Not Serve U.S. Customers
Kraken Pushes Back on IRS Demands for User Information: Report
21Shares and Ark Investment are making their third attempt to gain approval for a spot Bitcoin ETF.
Even Do Kwon came out to play, filing a motion to dismiss charges brought against him by the SEC.
This comes following a South Korean court ruling that Terra Classic is not a security, contrary to the SEC’s opinion.
Raise your hands to the (debt) ceiling!
An ever-skyrocketing fiscal deficit probably isn’t helping sentiment either.
At this rate, the US Treasury is on target to reach the Debt Limit by July.
Hitting the debt ceiling is nothing new though, irrespective of who is in power.
Whilst clearly not ideal, this shouldn’t come as a surprise. The reason the debt ceiling increases so often is because the government runs a deficit most years, and to pay off maturing debt they have to constantly issue new debt (wait - isn’t that how a ponzi works? Nevermind).
In my humble opinion, the debt ceiling is just a meme - an arbitrary “limit” on spending that can and will be raised whenever necessary. Since 1960, Congress has raised or suspended the debt ceiling 78 times. Today’s US Federal debt of ~$31 trillion represents a nominal increase of over 5000x since 1917, when it was ~$5.7 billion.
Lyn Alden’s latest newsletter covers this topic in great detail.
Foreign Nations make their move
If you are starting to feel less confident in traditional financial systems, you aren’t alone.
Central banks everywhere share these concerns, as reflected by a historic rise in gold purchases.
Central bank gold purchases spiked by 152% last year - the highest since 1967.
Nothing covered thus far paints a rosy picture for the US dollar, but this following section might be the most damning.
Back in January, investing legend Ray Dalio stated that the dollar global order is ‘fading away’, going on to say:
We are now going to have the major powers and their allies form economic, currency, and military blocs.
And that’s exactly what we’re seeing right now.
JUST IN: 19 new countries submit membership requests to join BRICS, challenging the US dollar's global dominance.
— Watcher.Guru (@WatcherGuru)
3:14 PM • Apr 24, 2023
In the past 24 hours:
- Yuan overtakes $USD as the most used currency in Chinese cross border payments
- Argentina announced they will pay Chinese imports in Yuan
- Brazil's president supported the idea of a "BRICs" currencyFirst it starts as a trickle, then a flood...
— Coin Bureau (@coinbureau)
6:08 AM • Apr 27, 2023
All empires must come to an end, and when a nation’s reserve currency is no longer the preferred global medium exchange or store of wealth, that is historically a pretty good top signal.
In contrast to regulators in the West, in the East regulation appears to be softening, encouraging crypto activity:
Hong Kong SFC to Issue Crypto Exchange License Guidelines in May
A Japanese government-affiliated web3 white paper calls for expansion of guidelines related to DAOs, changes to crypto tax regulations, clarification of NFT rights and introduction of start-up visas
Even the EU managed to outpace the United States in providing some regulatory clarity, after European parliament passed the Markets in Crypto Assets (MiCA) regulatory framework.
Perhaps it’s time to start looking at those foreign visas again. Which nation do you think will emerge as the most dominant in crypto?
The community is fed up too
Coinbase’s PR campaign appears to be working 🛡
And Gary is still everyone’s favorite whipping boy.
Last week we highlighted the hypocrisy of the SEC naming $ALGO a security despite previously promoting Algorand.
Well, it turns out there’s more dirt to be uncovered still. @ZK_shark went back through the lectures from MIT’s 2018“Blockchain and Money” graduate course and found even more contradictory positions.
In one lecture he clearly expresses that the vast majority of the market are decisively not securities:
"So we already know in the US and in many other jurisdictions that 3/4 of the market are not ICOs or NOT what would be called securities, even in the US, Canada, and Taiwan, the three jurisdictions that follow something similar to the Howey Test that we've talked about. 3/4 of the market is non-securities. It's just a commodity, a cash crypto."
Ladies and gentlemen, we live in a clown world 🤡
Regulators gonna regulate
Haters gonna hate, regulators gonna regulate.
Regulators want to raise the accredited investor regulations to $10m+ in net-worth.
SEC reopens proposed regulations to expand the definition of an exchange, with sights towards greater DeFi Oversight.
Howey test? Howey bout DEEZ NUTS
🧠 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 🧵
[PART1] I'll write this thread to make a complete and transparent chronology of events that lead to what @TheMerlinDEX has been.
With all the elements in my possession, I believe this was a planned rugPlease RT for visibility so that @zachxbt help identify the criminals.
— Atlas (@AtlasIsMe)
10:49 PM • Apr 26, 2023
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.
📢 We did some research on Merlin smart contracts and we identified the malicious code responsible for the draining of funds.
These two lines of code in the initialize function are essentially granting approval for the feeTo address to transfer an unlimited (type(uint256).max)… twitter.com/i/web/status/1…
— eZKalibur ∎ (@zkaliburDEX)
4:55 AM • Apr 26, 2023
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…
From a text AMA we (tried) to hold with the founders
Will he ever get his answer? #JusticeforDogeX
🧙♂️ 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 👇
Over the past 1.5 months one person has created 114 meme coin scams.
Each time stolen funds from the scam are sent to the exact same deposit address.
0x739c58807B99Cb274f6FD96B10194202b8EEfB47
— ZachXBT (@zachxbt)
2:56 PM • Apr 26, 2023
Stay safu.
NFTfi Summer?
👀
GM ☀️ twitter.com/i/web/status/1…
— NFTfi.com (@NFTfi)
3:22 PM • Apr 24, 2023
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
Everything you need to know about Aave and their GHO stablecoin
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
Pour one out for Voyager creditors
FTX gonna save us🙏
FTX implodes 💀
Binance gonna save us 🥳
US blocks sale 😳
Court allows sale to go through 😩🙏
Binance pulls out 🪦— db (@tier10k)
6:06 PM • Apr 25, 2023
🕵️♂️ The Weekly Raid by DeFi Raiders
Every week Rel3ntless, owner of DeFi Raiders, shares his new favorite early-stage projects.
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:
We are excited to introduce PSY: A new stablecoin that collateralizes Liquid Staking Derivatives (LSD). Our stablecoin $sLSD will play a crucial role as LSD volume is expected to grow significantly in DeFi following the Shanghai upgrades. #LSD
Here is a thread on PSY 👇🧵
— PSY (@PSY_Stablecoin)
1:28 PM • Apr 6, 2023
🐦 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:
This is a Paid Promotion:
@array_capital is the new kid on the block aiming to be a Launchpad, Integrated Dex, and Venture Fund powered by Real Yield.
So what makes them tick?
— 🉐 Crypto Linn (@crypto_linn)
3:03 PM • Apr 21, 2023
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.
What is @YamaFinance ? 💹
Listen to @0xgodking and @zero_goliath explain below👇👇
— Hunting for Alpha (🎙️, 🏹) (@huntingforalpha)
2:32 PM • Mar 10, 2023
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:
🚨 NEW ARTICLE ALERT 🚨
🦆 In today's issue our resident duck @cryptoaioli dives into the details of @RDNTCapital and @tapioca_dao, two omnichain money markets using LayerZero.
Who comes out on top? Read on to find out…
🧵👇
— 𝗦𝗲𝗻𝗱𝗶𝗻𝗴 𝗔𝗹𝗽𝗵𝗮 (📨, 🏹) (@sendingalpha)
2:44 PM • Apr 25, 2023
👥 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 Launching Airdrop 🎁
Come and check if it is available to you!
Where? - spiral.farm/airdrop
When? - 29th of April, starting from 15–00 UTC+0
A little hint! It's only the first phase, you can still join us for part two.More info: spiraldao.medium.com/4e3bb5d46d3b
— Spiral DAO (@Spiral_DAO)
6:04 PM • Apr 25, 2023
📝 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 🔥
We will keep building and innovating! 🦾💎
— Crypto Meina (@CryptoMeina)
2:26 AM • Apr 27, 2023
🍯 And last but not least, congrats to Smonkey and the Beras for closing a huge raise of $42.0M (ofc) 🍁
👏👏👏
We're excited to announce our $42.0M fundraise from leading funds and angels including @polychaincap@hack_vc@daofive@tribecap@citizenxcrypto@shimacapital@robotventures@zmanian
@musalbas and many others to build the deepest pools of liquidity in DeFi.— Berachain 🐻⛓⚛️ (@berachain)
2:00 PM • Apr 20, 2023
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.