The Golden Bullrun
My thoughts on crypto for Q2 and beyond
It’s been a while since my last post. I’d like to start by thanking everyone for helping me hit the insane milestone of 4,000 subscribers, something I’d have never imagined possible less than six months ago. It’s absolutely nuts that so many people from around the world have come together to support my writing and read everything I have to say, no matter how deranged or untechnical it is. While I’m still working on my Frax Finance deep dive (which should be out sometime next week), I decided it was time I lay out my thoughts regarding crypto as a whole.
It can be pretty difficult keeping up with everything that goes on in the space, as I’m sure almost all of us can attest to this. Inspired as always by writers like @blknoiz6 and the herculean efforts of Darren Lau over at The Daily Ape, I thought it was long overdue for me to condense many of the ideas, lessons and new protocols I’ve discovered in recent weeks. For the sake of my sanity, this won’t be overly technical and instead I hope this article serves as a framework for helping people learn about some of the promising trends and new projects that are popping up in the wild west of crypto. This will definitely cover only a small fraction of everything new and exciting, but I hope it assists you in navigating Q2 2022 and (potentially) beyond.
As always, be sure to follow me on Twitter @knowerofmarkets if you’re interested in hearing me ramble about the trials and tribulations of university life and everything in-between. Hopefully this is a nice read that distracts you from the turbulent crab markets we’ve been stuck in, as they’ve certainly taken a toll on a lot of us judging by the quality of CT posts I’ve seen lately. If you ever want to chat more about anything crypto related, my Telegram is @knowerofmkts and it’s easier to reach me there since Twitter DMs can get pretty messy.
To protect myself from the long dick of the law, none of this is financial advice, I have not been paid to include any of this and I hold some positions in the coins mentioned, however negligible these positions may be. Do your own research and don’t get burned listening to a cartoon grim reaper posting about magic internet money on the internet.
Looking at little miss market
It’s clear to anyone who’s looked at charts in recent weeks that things have been pretty damn crabby. Whether it’s a bull or bear market, ol orange coin has been trapped in a pretty nasty range that’s been punishing anyone who isn’t an experienced trader - like myself. I’ve been super busy with crypto work and school lately, and because of this my portfolio hasn’t been rebalanced in quite some time.
I firmly believe that the markets will continue to chop around for the next few months, but I’m optimistic that BTC can break out of its range and at least make an attempt for the promised land sometime soon. It’s been very tricky trying to nail any narratives as of late, after the unfortunate failure for Evmos to spark a Cosmos eco bull run, with the objection of JUNO making a nice little run (after I sold, naturally). Despite these hiccups, I think Cosmos will probably outperform other alternative L1s when the market eventually grinds back up, but I won’t be participating as I see greener pastures elsewhere.
DeFi has also been in a very precarious position after the debacle surrounding Andre Cronje’s departure from Solidly and the obvious connections to Danielle Sesta which left a bad taste in everyone’s mouth. Even though the Curve Wars have died down, the dream is still very much alive in my eyes.
I wrote an article last month detailing some possible steps to achieving a DeFi renaissance, under the tentative title of DeFi 3.0 - this has yet to come to fruition but I still hold my hopes. CRV and CVX will always have a special place in my heart, as they were the sparks that ignited my love for DeFi and allowed me to build a platform for my writing. Even though price action has been less than ideal, Curve is still a powerhouse of DeFi and will more than likely remain one assuming Uni V3 doesn’t absorb too much of its marketshare.
Protocols like Dopex and [REDACTED] (which I’ll be mentioning further on in this article) have the most potential to revive an interest in DeFi, even though the market hasn’t looked at their tokens with any favor. Aside from existing protocols, I’m interested to see NFTs and GameFi integrate with DeFi, as the possibilities are pretty cool to imagine. Hopefully we make it out of this weird phase where shitty games are launching left and right with shitty tokens and FDVs, because GameFi can end up being pretty damn cool.
If BTC and ETH reclaim highs by the end of the quarter, I’d be pleasantly surprised. My GBTC and ETHE are deeply underwater and eventual retirement funds in my Roth IRA are struggling to maintain value. I’m
Promising protocols and “things”
While I’ll try and keep this list relatively condensed, all of the protocols I’m mentioning are either A) experiencing upcoming catalysts or B) something that’s intrigued me as of late, regardless of if there’s a token available. I went through a phase where I felt very disenfranchised with crypto as a whole. I’d begun to lose faith in this magnificently terrible side of the financial markets, ready to sell it all and write as much as I can with almost zero exposure to anything. Every chart looked garbage, every idea I’d thought brilliant was a waste, every founder who I’d deemed the next Steve Jobs was a fraud.. and so it goes.
I kept on reading and taking notes (lots of them) and digging through as many docs and Medium articles as I could. In the process, I began to find the spark that had dragged me into this space. Beneath all the rubble of -75% from high alt charts and horrible token launches, I found some magic. Here are just a few of my favorite (current) things, to quote an old song or whatever. I don’t intend to explain too heavily into any of these - I only wish to put them on your radar. Let’s jump in.
Alkimiya and their wordsmith team members
Alkimiya is a new protocol working on expanding the capital efficiency of - drum roll - hash power! In their own words, Alkimiya is a “permissionless, open-source protocol for consensus capital markets.” If you want to make yourself feel like a bad writer, go read this article created by Saneel and Leo.
Due to the difficulties in the entire mining situation that goes on in crypto, Alkimiya is creating a platform to allow for “consensus producers” to create financial contracts backed by the consensus rewards, offering them a means of obtaining a return upfront. I’ll admit that much of this is outside my wheelhouse, but I really just enjoy their writing - I love a good wordcel.
Alchemix Finance making money out of other money
ALCX was a coin I’d unfortunately failed to take profits on Q4 2021, but I still support the protocol, they just gotta make those big green lines appear. Scoopy Truples is a beast and Alchemix is a really interesting concept that I think is severely underappreciated.
Here’s a thread on Alchemix v2 that will explain it much better than I can, of course. Alchemix v2 hopes to offer more collateral tokens and yield strategies, with users capable of creating their own yield aggregators within the protocol (Alchemix / Yearn^2?). Alchemix wants to offer the best yields they can for users, while expanding upon the capital effiency offered in v1. I enjoy ALCX as a long-term bet on DeFi innovation, however ballistic the token may go in the short term.
DarkFi and something about lunar punks
I really liked the DarkFi Manifesto, as it was some of the best writing I’ve seen recently. Essentially, I don’t really know what they’re building. Later on in the article they mention “simple anonymous swaps” and “building out organizational tooling” to expand their empire. Tornado Cash is a very cool protocol (s/o hyperbart) and the privacy coin narrative has tried and failed to catch a bid multiple times. Anonymity and privacy will only continue to grow in importance with each passing month, so I’m really interested to see what DarkFi will bring to the table. Sure, there’s no token, but it can’t hurt to involve yourself with some bright people who know how to write a damn good article.
Timeless Finance - a protocol that doesn’t age, maybe
Created by the eccentric and brilliant Zefram.eth (@boredGenius), Timeless Finance is a protocol that will be launching soon (I hope), offering users a yield tokenization protocol with both perpetual and negative yield tokens - PYTs and NYTs. I’ll refrain from referring to these as Pretty Young Thangs and New York Times, but the concept is pretty cool. Essentially, users will be able to hold the rights to perpetual yield claiming (via PYTs) and the opportunity to hedge your DeFi bags by shorting yield rates (via NYTs).
I’ve dug pretty deep into their blog posts and done more math in my “free” time than I’d liked to, but the ability to hold a perpetual swap on yield rates is pretty cool. I learned about too many types of value - including corporeal value, which I guess exists - and determined I know almost nothing about math in crypto. Despite the hit to my self esteem, I am super bullish Zefram and his capacity to deliver a much needed protocol. Wen token?
Aave Protocol and Portal 3
With the release of Aave v3 comes a wide range of opportunity for DeFi 1.0 projects to reclaim their past glory. We’re all very familiar with the rampant cash grabs and rugpulls that smear the name of DeFi, but protocols like Aave continue to impress and innovate, solidifying their position as a titan of DeFi.
To give a brief summary, Aave v3 provides some new features such as a portal that allows for the “seamless flow of assets between Aave v3 markets and different networks.” Bridges are hot right now (for good reason) and Aave is a powerhouse that will never stop impressing me. The token has obviously been down only for sometime now, but I wouldn’t be surprised to see Aave reclaim its highs in attractive market conditions, especially considering their high TVLs and widespread usage. DeFi 1.0 has seen some bursts of hope over the past year, so this might end up all too familiar and fade away. Just like YFI had seen a brief spurt of growth, something similar could play out here with AAVE so be cautious and don’t lull yourself into a -30% trade if the hype dies down in a month.
Redacted Cartel does NOT sell drugs
I hate to be biased on anything I write about, but unfortunately today I must be. I joined [REDACTED] at the beginning of March 2022 after working with @veSami_ very closely over at New Order DAO. Pretty early on I realized how strong the team was and how hard they were working, making me feel lazy in the process. While I can’t write code and my only value add is missing team meetings and writing puff pieces, [REDACTED] has some big things in store - whether it be Hidden Hand, the protocol’s very own bribes marketplace or other things which I cannot mention.
I get messages all the time about BTRFLY price action, but I simply do not care. Sami is a beast and everyone at [REDACTED] is a killer and I’d have to have a negative IQ to feel anyway but bullish on the protocol both this quarter and beyond. Up and to the right, my friends.
LayerZero and the bridgooors
After Alt L1s caught on and money became trapped on unique blockchains competing with Ethereum, there arose many problems that required a solution - bridges!
While the bridge infrastructure is still in its infancy, protocols like Synapse have made bridging between different networks fairly easy and intuitive, even for a technically (and mentally) challenged community like CT. After building in the shadows for sometime now, LayerZero is live and ready to absorb the traffic. LayerZero is an “Omnichain Interoperability Protocol designed for lightweight message passing across chains.” We’ve all sent a message before, whether it be through tin cans attached by string or a flirty text to someone on Tinder (or Telegram). LayerZero makes it easy to bridge in fewer clicks and access your funds almost instantly, something often challenging and cumbersome with the current crypto infrastructure.
While there is a token (STG) it got bought up by a couple of whales and then the secondary market got bought up, but this came with a premium. I’m bullish technology but I’d consider it a fair play to wait for some of the hype to die down and bid lower, or try to LP if you see fit as that’s usually a very profitable play for new coins and markets. Bullish bridges, we wouldn’t get anywhere without them!
Lido Finance as a blackhole for ETH
With the much anticipated Ethereum merge to PoS looming on the horizon, Lido has become the talk of the town, if the town was a handful of people on CT that managed to confirm my biases. For those unfamiliar, Lido Finance offers a liquid staking alternative to the costly 32 ETH required to become an Ethereum validator. Lido’s competitive advantage stems from the opportunity of liquidity on your staked funds, allowing users to access ETH and interact with additional DeFi protocols while still validating the network via Lido. Despite ETH and its horrendous price action, I still believe that the merge will be a bullish event that will help Ethereum finally capture the throne (as definitive number two cryptocurrency) and distance itself from its competitors. Even though a smorgasbord of alternative L1s made quite the run in 2021, Ethereum is the king and will continue to see capital inflows from both institutional and retail investors alike.
Lido’s native token - LDO - has also been heating up, bouncing from its lows and leading the way in a market bogged down by macro concerns and geopolitical tensions. While issues around token issuance and the unlock of deposited funds remain valid concerns, it’s hard to discount Lido’s over $15 billion in deposited funds that continue to produce tens of thousands of dollars in daily revenues. Tokenomics are a very topical issue in crypto and it’s no secret that a lack of emissions schedule hurts LDO on its path to double digits. But when have we ever cared about shitty tokenomics in the past? I failed to heed my own advice and long LDO a few weeks ago, but I still believe there’s a strong chance we see something along the lines of a 1.5x from here. But what do I know?
The Wassieverse and broader NFT landscape
While Wassies are an older (in CT terms) NFT project, I believe that there will be a resurgence in pricing of quality NFT projects that offer a sense of community to their holders. It’s hard to really pinpoint what makes a Wassie so special to look at, but once you’ve glanced through the collection and interacted with some of the Wassie PFPs over on CT, it’s hard to deny their influence and appeal. Personally, I don’t *yet* own a Wassie - I like my own PFP too much to ever really change it from the grim reaper (honorary Wassie wen?) that my lovely girlfriend @megm3gmeg drew for me.
In addition to Wassies, there are Tubbycats, probably the soundest money on the planet you can grab hold of currently. 1 Tubby = 1 Tubby and this is a golden ratio in my eyes. Similar to Wassies, I do not currently own one but firmly enjoy the art at almost any price - preferably after I buy them for .1 ETH and eventually sell for 25 ETH, but I digress. Another anticipated project is releasing soon, this being the Anata NFT project of 3D avatars meant for use in everything from streaming to metaverse interactions. While we currently don’t have an actual metaverse, I think technology will continue to evolve (duh) over the next 5-10 years and deliver us something that resembles a very crude version of the metaverse described in sci-fi novels like Snow Crash. I’m bullish Anata as these are clearly pieces of art that have had many, many hours put into them. It’s not everyday you’re given the opportunity to
NFTs are a weird phenomenon, especially considering BAYC and the new APE token which has performed unsurprisingly well. NFT lovers represent an entirely different subset of CT and I often find it really odd browsing their tweets. I’m not hating or condemning them in any form, it’s just interesting to see how crypto has morphed and cast its tendrils into various aspects of life and culture. Going forward, NFTs will continue to become more entrenched in our lives, for better or worse. No matter how loud a small group of anti-NFT protesters yell out, these digital receipts of apes, punks and cats will continue to not burn down rain forests and consume all of the world’s energy. I’m bullish quality communities that sprout up amongst NFT projects and believe we’ll see many become priced out of some of the bigger name collections for good - just look at how resilient BAYC holders have been in their lack of selling, for reference.
Staying ahead of the trend(s)
As mentioned earlier in the article, narratives in crypto have become part of every speculator’s vernacular. We saw OHM forks lead the charge for a short period of time, followed by the Curve Wars and increasingly kicked ourselves as alt L1s returned ridiculous multiples from their 2021 lows as we sat around waiting for the flippening. Through 2022, narratives have came and gone almost instantly - remember evmos szn? Yeah, me neither.
It’s going to become increasingly difficult to catch and time these narratives as the ball of hot money moving through crypto continues to adapt and evolve to extremely adversarial market conditions. I don’t know about you, but I’m not entirely sure we’ll see a popularized narrative spread across CT anytime soon. Market participants are hungry to make back all the money they’ve lost after pretty nasty drawdowns in every coin (save for JUNO, of course). If the next bullish narrative influenzas begin shilling ends up resembling the evmos play, sentiment is going to get even more negative on CT, if you can believe it.
People will try and tell you narratives are played out or were simply a fad intended to stir up exit liquidity for early investors or insiders. While this has some truth to it, stumbling on a narrative early on can mean the difference between a 100x portfolio gain or a few weeks on the sidelines, an eternity in crypto time. If you want to know just how powerful striking in on a narrative is, just look into Satsdart’s JEWEL or JOE plays, or the massive gold mine you would have discovered buying OHM back in Q2 2021.
While markets might become even more PvP and next to impossible to trade if you’re not balls deep, don’t let this discourage you from giving up entirely. If you’re burnt out or stressed after a bad start to 2022, take a break and come back. I guarantee you the market will still be here, potentially in a spot ready to make you more magic internet money. Another benefit from taking a break could be the potential spiritual journey you might stumble upon, finally free from the shackles of CT.
Potential macro concerns / possibilities
I’m far from an expert on macro analysis. In fact, I’d hardly even consider myself to be a novice. If you’re looking for quality information on geopolitical analysis related to the financial markets, I’d strongly suggest reading just about anything written by Arthur Hayes. His most recent article (here’s a link) is probably my favorite of his in recent months, as it really breaks down the situation and describes Zoltan Pozsar’s work in understandable terms. I won’t try and summarize it as that would probably be a bore to many who have read it. Instead, I’ll offer my own opinions which are definitely not going to play out and I look forward to reading this in three months to reflect on how wrong I was.
Personally, I’m a little bit concerned longing anything here with the possibilities of a nuclear war dangling over our heads. Putin has lost control and any form of leverage he once had (except for the nukes) and I’m almost certain Russia and its citizens will experience a recession similar to what played out in Germany after WW1. Studying history is a useful tool that can assist you in analyzing markets, as it often repeats itself. Humans are sensitive creatures and don’t take kindly to criticism or threats against their pride - Putin is no stranger to this and has clearly displayed chaotic tendencies through his tumultuous time in office (if you can even call this a normal situation).
Hayes commented extensively on the concepts of inside and outside money (popularized by Pozsar’s writings) and examined the possiblities of nations turning to hard assets like Bitcoin, gold or other commodities after Russia was “cancelled” by almost every Western power. Prior to reading Hayes’ most recent work, I hadn’t even considered the implications of these events and how the world’s massively complex and intertwining financial system might be uprooted for good. There’s clearly a shifting in the balance of the world’s powers that’s ongoing - whether this is a positive or a negative for crypto is really besides the point and a shortsighted topic to debate over. Of course all of us would prefer for our internet money to 1000x in the next five years, but at what cost can (or should) this occur?
Hayes described the almost inevitable possibility that consumers in the US will be forced to endure harsh price hikes in almost everything, the continual threats of inflation and the general lack of competency from almost every level of government. Things will get bad before they get good, but many on CT seem to be missing the point entirely. Yes, a transition to a financial system denominated by hard assets would be terrific for BTC holders, but what good is an uber rich subset of the population when the vast majority will be struggling to get by even more than they already are?
I’m hopeful everyone can regain peace and put an end to Putin’s horrific actions. Until then, we just have to sit on our hands and watch as millions in Ukraine are sent through a living hell each day as Putin wreaks havoc on their lives with relative impunity. War is never the answer, but something must be done - what this is, I don’t know.
While we sit in our parents’ basements and long APE coin with 100x leverage, it’s important to be grateful for how lucky we are to be in this position. Trading is a privilege, but it often doesn’t feel this way everytime Alameda steals our lunch money and discourages us from finding financial freedom. Crypto is certainly the most “it” place to be spending your time right now, whether you’re building Google on-chain or trading the one minute chart in-between lines of blow.
I’ll remain writing about crypto for as long as I can, regardless of market conditions. Obviously price action isn’t ideal, yadda yadda yadda - it doesn’t matter. There’s too much raw innovation and bullish energy compounding within the community each day, it would be silly to give up now. So get out there and read some docs, talk to some founders and try to do some of your own research. Trust me, it can only help.