From political coups (Trump taking in Venezuela’s Maduro) and Epstien files, to eyewatering rallies in metals, agentic AIs breeding anti-human propaganda (clawdbots aggregating on moltbook to create AI language that humans cannot decipher on moltbook) and setting records in the Yen’s Interest Rate; we are halfway into the second month of 2026, and anywhere you turn, it seems as though the sky is falling.

“Absolution Before Rebirth”

Overdosing on the uncertainty brought on by divisive “us vs them” agendas that are amplified by dystopian AI fear mongering and hyper-interdependent global economics, social psychosis is running rampant.

2026 is a midterm year in the United States: a year when opposing political parties cause incredible uproar in an attempt to capture control, be it through the siphoning of capital or the imposition of societal unrest. This polarizing year ripples across continents, dislocating power structures.

Against this backdrop of psycho-social political chaos, we have the digital microcosm of crypto melting at its own hyperbolic pace…

Forged in the hellfire of anti-government rhetoric, the crypto industry we once knew is no more. 

The rebellious spirit of self-sovereignty and an independent internet economy, uncorrelated with the rest of the world, has been replaced by its suited big brother and turned into just another industry, or to be more accurate, a digital extension of all other industries, which it was actually intended to be in the first place.

Narratives of financial nihilism are finally shutting down, and a return to the “soul-less” financialization, where cold logic is king and the bottom line matters, is coming alive again. Once, fully crypto-native companies are crossing the corporate chasm and becoming traditionally structured corporations, case in point, Tether.

CT is going absolutely nuts watching the flames of a meme-fueled supercycle fizzle out. The first sign of a healing market.

This is not a bad thing; in fact, it is a natural progression from the grassroots wild west into the mega-corporate mainstream, the same progression that the internet experienced.

As we proceed into the acute phase of distress in the crypto-verse and an era of hyperbolic macroeconomic uncertainty, our cognitive consciousness begs the questions of “How to think” and “what to do”. 

As it stands, only TWO things are certain:

1) First and foremost, Nobody actually knows anything
2) Second, DO NOT ASK YOUR AI OVERLORDS FOR INSTRUCTIONS

At this moment in time, autonomy is becoming evermore important.

LEARN, ASSESS, and THINK FOR YOURSELF.

Sometimes, it helps to find others and bounce a few ideas around.

That is exactly what this piece is intended to do: open a conversation, stimulate some thoughts, and challenge the self-imposed emotional illusions we all encounter.

So let's take a look into the crystal crypto ball and make a few absolutely random, uneducated, educated guesses about what is/may be ahead of us.

The 2 Big Themes of 2026

Guessing the outcomes of specific events, and being right about them all, is the art of exponential insider knowledge; might as well throw a dart blindfolded. 

However, taking a directional bet could land us closer to the truth. The direction in which 2026 is headed can be summed up in two components: Drainings the Swap and Material Matters.

Draining The Swap

Borrowing this phrase from everybody's favorite American president, Donald Trump, draining the swamp refers to three things: 
- cleaning up the excesses
- returning to value-first thinking
- recalibration of power distribution

Cleaning up the excesses refers to the cleansing of misappropriated value. Regardless of what people think, or the Epstein files may say, Donald Trump did something that fundamentally heals society, re-enstating the obvious biological fact that there are two genders. From the Somali Day Care centers to the gender-dysphoria agenda, a lot of money has been funneled into worthless (I would argue harmful) pockets that must be clawed back and guarded against.

Returning to Value First Thinking builds on the cleansing of excesses but from a more social-first lens. Families should be focused on educating children, not empowering their sexual insecurities. Societies should be collaborating to solve problems, helping one another, not pushing each other down. Creating value should be the first priority of any sentient human being, not endless, mindless consumption. 
* No, I don't think that the administration will solve all problems, but it's nice to fantasize about a utopian, healthy world a little.

Recalibration of Power distribution is something on the borderline between political agendas and conspiracy theories. Here, we tread softly, but refer to the placement of decision-making into the hands of “reliable” parties. Who would you rather have shepherding your community: a successful businessman or a neurotic Somali daycare owner?

Please understand, this has nothing to do with political parties; it is definitely influenced heavily, but not solely determined by them.

Material Matters

Physical goods get their time to shine (pun intended). 

The overdrawn hyper-digitization that has taken place over the last 20/30 years put society ahead of its skis. 

Yes, AGI/ASI might be here/around the corner, and in that reality, the only thing that will separate man and machine will be the atomic world (at least before robots come online). 

2026 will likely give us a chance to appreciate the hard physical objects of value a little more: metals, jewelry, collectibles, fine art, and the simpler things in life.

And now.
It's time to throw some darts, to roll the dice with a few general predictions about specific things. The approach here is to acknowledge the direction of evolution, rather than try to pinpoint a single facet of it.

Let's roll:

While many of these touch on crypto directly, a few are more general subject matter assumptions that are not entirely confined to blockchain/web3, but that do to some degree influence the space. Regardless of what the CT prophets may try to spew, the industry is still (and only will increasingly moreso become) heavily tied to the global economy.

1) Acceleration of Tokenization

Somewhat hidden behind the crypto-native term RWA, this is the mega-godfather trend of all crypto trends.

Spanning long before, into, and far beyond 2026, more and more of the world will register, record, and track the ownership of valuable assets on blockchains rather than in Excel spreadsheets or private legacy databases. Larry Fink, easily one of the most influential leaders in finance (CEO of BlackRock), has been talking about the inevitability of all markets moving to tokenization since 2022.

Thus far, a minuscule fraction of the world's wealth has been brought on-chain, by some measures less than 0.1%. If it’s true (and I believe it to inevitably be so) that all objects of value will be on-chain, then this category hasn't even scratched the surface of its potential; we are talking about mind-bending numbers of 999x in growth from here. When accounting for the inflationary forces at play and the growth/arrival of data and service providers for this specific category, the future is abundant with opportunity. 

As it specifically pertains to 2026, it wouldn't be surprising to see a 4x growth take place, doubling the variety of tokenized assets and doubling the amount of existing assets that are tokenized. 

2) Proxy Position Recalibration

New geopolitical regimes are establishing a new world order. 

Power has always been concentrated in the hands of the upper social classes, and that will not change. What will change is the playground in which they facilitate the show. 

2026 will likely cement a new dynamic that determines where attention flows to/from, who is “endowed” with the natural resources for the provision of prosperity, and how trade will happen (in terms of physical supply chain). 

There are already inklings of this that have been popping up over the last few years; recent activity is heavily accentuated by places such as Venezuela, Greenland, and the eternally problematic Israel and Iran. 

The EU continues to tread down the path of absolute degeneracy with the outright diabolical implication of statements by individuals such as Ursula Von Der Leyen and Christine Lagarde, and the ruinous regulations being put in place, such as in the Netherlands. What was once the birthplace of capital markets has just become its antithesis and the poster child of civil-control corruption by pushing forward a 36% unrealized tax gain on crypto closer to law.

One of the more interesting ones could be Korea, where 2 of the world's top 3 largest RAM manufacturers are located; sounds like another opportunity to wreak havoc just as with the Taiwan semiconductor situation. One positive potential outcome might be a de-escalation in Ukraine, but only time will tell.

3) Return to safety

This is a two-pronged point, where logic takes precedence, and value accrual becomes the focal point for digital asset market participants. An exodus from memes and a flocking to “real value”.

The supermajority of last “cycle” was confined to memecoins. A few narrative hops between AI, DEPIN, and launchpads ultimately led down the path to memecoins.

Illustrative narratives were confabulated around community/culture money, financial nihilism, and other bombastic topics to validate why Smoking Chicken Fish (SCF) and GigaChad (GIGA) will have economic cults worth billions of dollars. 

If last year didn't make it obvious, then possibly 2026 will, that whatever CT gurus may try to vomit all over the internet, tokens that are entirely based on community by the nature of their virtue imply that the community is the product, which means there is no real economic value being created other than PVP speculation. 

Even though there were a few real long-term potential candidates born during this period of insanity, it should come as no surprise that almost all of these “projects” imploded. 
* Quick outtake, the author believes the root of the problem wasn't in the trial of these wild ideas, it was in the onslaught of supply from malicious operators

The industry has had enough.

People have been licking their wounds and re-evaluating where they should be allocating their capital. This brings them down the rabbit hole of real value tokens; the likes of those with healthy economic designs, real-working products, and more likely than not, no anonymous team or community takeovers. 

Most likely digital assets with clear-cut value dynamics expressed as healthy tokenomic designs with concrete value accrual systems (such as buybacks conducted by $HYPE and $PUMP) or extended-niche value, such as privacy and value storage.

4) Privacy Pandemonium

Explosion in demand for privacy. 

Privacy is the next largest permanent zone of value after RWAs. We already got a taste of the privacy crazy at the end of 2025, and there is reason to believe the crazy will continue through 2026.

Measuring this in terms of adoption is tricky, so to evaluate this, we will assume that all metrics supporting public anonymity grow substantially and unilaterally. The activity, as well as the prices of privacy-centric crypto networks and currencies, go up. The entire sector. WAGMI in privacy.

In the privacy stack, we have 3 general buckets: private money, private computation, and privacy protocols. 

Protocols tend to have weak value accrual structures, so we will dismiss them. However, among the money and computation, the stickiness of a platform can be permanent. 

For the conversation around money, we have two main contenders, those being ZCash (ZEC) and Monero (XMR). There are also a handful of smaller contenders; however, their relative lack of magnitude leads to security leaks that long-term disqualify them. Honorable mention to (DASH). 

For the conversation about computation, there is quite a large pool of interesting platforms worth paying attention to. ZKsync (ZK), Railgun (RAIL), Zano (ZANO), Horizen (ZEN), and the new kid on the block, Zama (ZAMA). We can go on to list a handful more, but then we are just as lost as when we started. 

The important takeaway here is that over time, these will all likely consolidate around a very small select group, but that potential could be life-changing.

5) Government's Role Intensifies

 Crypto was originally a retail-first product. 

The wild west nature, where there was a lack of regulation, made the space exude an aura of “by the people, for the people”. 

After years of molestation by scamming groups, the original narrative of self-sovereignty has become a conversation about ETFs, DATs, and regulations.

Now, with greater acceptance around the world by different regulatory bodies, it would be prudent to assume that MORE governments get involved and to a greater extent. 

This is a two-sided coin (pun intended). While there will likely be great progress in jurisdictions that embrace the space with favorable regulation, there will more than likely be the arrival of very bad decisions, as made extra clear by the shenanigans coming out of the Netherlands to tax UNREALIZED gains from crypto. 

6) DEFI Rebirth. Again.

Darling of the summer 2020 era, DEFI remains the foundation of crypto technology. Since its unofficial arrival in the post 2018 season, DEFI has been the silent foundation of all crypto technology. 

While greed and shady memecoin marketing may have distracted people, the ever-increasing distrust of governments from their populations and even other governments is the spark to light the DEFI fire. As the need for neutrality keeps rising, the need for DEFI instrumentation becomes all the more pronounced. 

2026 is well positioned to be the year in which decades of progress is made. 
Marked by the consolidation around good tech and the truncation of unsustainable wannabes, we will hopefully see a reduction of clone spam and a rise in quality utility, distribution, reliability, and economic design.

7) Stablecoin Evolution. Again..

Already one of the major mega-trends from years past, 2026 will continue to fuel this train. 

In fact, it might intensify all the more. Success here is invisible to the naked retail eye. This game is about the dollar becoming the unit of internet accounting and settlement.

Growth metrics for stablecoins (specifically fiat-backed/pegged ones) are wholly different than metrics for cryptos/equities. 

Success here is invisible to the naked retail eye. Corporations issuing their own “branded” fiat coins and settling commercial activity/payments instantly and internationally on-chain without users ever even thinking/knowing about it is the objective.

As it pertains to 2026, the stablecoin evolution is compartmentalized into 3 parts, each of which will advance in some way:
a) New types of Stablecoins (Copper, Platinum)
b) Broader Selections (YEN, AED, etc)
c) Government-issued stablecoins (yes, pseudo-CBDCs)

8) Industry Value — UP

ATHs inbound (Sort of). 

Value accrues vertically (price appreciation) and horizontally (unit expansion). The On-chain economy will continue to grow as more value is tokenized. Regardless of where the price of Bitcoin may go, the raw amount of different tokenized objects will eventually eclipse the entirety of the existing crypto-native economy.

As a simple way to measure this, we can use the total market cap of crypto. The last day of 2026 will be higher than where the year opened.

9) Bottoming Internet Economy

We won’t put an exact number or date on it; however, sometime this year, crypto will set a lower price than where it started the previous year, and then go screaming to new ATH’s. Full gas, no breaks kind of thing. Ok, maybe not straight to ATH’s, but we will find a bottom this year.

10) Commodity Rally Continuation

Even with the already absurd behavior in the prices of metals, there are still basic economic laws at play that can/will contribute to a never-ending exponential demand for alternative physical objects of value, and no object in this regard fares better than Metals. 

The previous rally was well-informed, well-resourced entities front-running future demand. Market price things looking forward, what they expect something to be worth tomorrow; tomorrow will eventually bring more money into circulation, more stringent regulations, and more people looking for more options.

That move has established a new higher watermark across the board; a forever higher threshold (we will never see Silver an ounce at $10 again, and Gold below $2,500)

The economic shenanigans taking place with China’s balance sheet, the inevitability of the American money printer turning on again, and the turbulences of intergovernmental competition for citizens contribute to persistent demand for assets that cannot be tracked or confiscated.

11) Full Blown QE initiation

What the entire world of finance has been waiting for. 

Given that QE has long been considered consensus, everybody is trying to front-run its arrival. Therefore, in an attempt to dampen any sharp manipulative attempts that result in aggressive spirals, the method by which QE is introduced will be maximally silent (if not already in process).

Once the QE becomes obvious, we get a short window of violent movements that will lead to the final phase and meat of a directional trade.

12) AI Agent Blossoming

Already heavily underway.

Clawdbot, Moltbook, and other developments are not showing any signs of slowing down.

Anthropic raising AGAIN, only this time at a $380 Billion valuation for a round G; all while certain key people are packing up and leaving.

With the constant acceleration of AI, it seems that a rebirth of agentic on-chain actors comes back into the crypto sphere. Everybody is expecting the AI bubble burst; this probably means that it still has some room to keep on chugging. 

13) Hardware Holdup

There is a lot of pent-up demand for rare earth minerals for supply chains in batteries, robotics, electric vehicles, and data centers.

This demand results in forward-looking pricing speculation that is extremely sensitive to any disruptions.

As a mid-term year, 2026 is primed for having parties with conflicting interests superimposing constraints as part of their negotiations.

14) Fiat Repricing

BRICS slows down, and the USD reasserts its global dominance as a unit of account, measurement, and settlement.

Russia has already begun floating rumors about potentially returning to a dollar standard for settling its international trade.

The incredible behavior we see taking place in the Japanese economy, coupled with the competitive exporting industry worldwide and the assumed agenda to MAGA, seems to be a concoction of variables highly likely to contribute to a strengthening USD. When evaluated against the upcoming need to print money, a strong dollar would give theprinter some breathing room.

15) Emerging Markets Emerge

Stock markets for developing countries that have been doing insane, mind-melting crypto shitcoin numbers.

Jordan, Venezuela, Israel, Laos, you name it. Over the past 2 years, stock markets around the world have performed MIRACLES.

IBVC — Venezuela’s Stock Market: +>328%
TA125 — Tel-Aviv Index: +>200%
BOVESPA — Brazilian Index: +>70%
ASE — Jordan Index: + >50%

After watching Saudi Arabia launch its international initiative by opening up its TADAWUL markets to the world, there is no doubt that this trend will continue.

The world is HYPER abundant, and opportunities are sometimes found where most people don't look. NEVER BLACKPILL. NEVER DOOM.

16) Retail Market Mania Tops

Capital flows have entered the manic zone for many retail ventures. Pokemon, One Piece, Hotwheels, and Sports Cards, the market has been flooded with supply; demand is spiking to the highest extremes, its time to cool off, and shake out scaplers… Soon, but not before we set a few more ATHs.

We have already seen some of these delirious markets cool off, specifically for the shoes. But the will to gamble on random things prevades society.

I do not think this is the end of this market, quite the contrary, this is a time to recalibrate and consolidate away the froth.

17) Prediction Markets HypeFlood

A new paradigm, forever embedded into the social fabric.

Everybody is now talking about prediction markets and their glorious expertise on the subject. Noise aside, the liquidity profile and informational asymmetries of these novel markets make it the PERFECT object of financial evolution. 

Even though we have already seen some absurd markets, not the least being the return of Jesus, we have seen nothing yet. Things are going to get so much weirder going forward. People are going to be betting daily on the weather, traffic, and any/everything else.

Being long prediction markets is being long the continued digital-hyper-financialization of society. LONG AND STRONG.

*18) Alt Seasons

This one is a wildcard.

Surely all things must pump… right?
Will it happen? We can hope. 

This is a downright dangerous thing to even write. Here, there are a few silent threads being pulled that, when combined, contribute to a potential ALT SEASON. 

Capital that was diverted into gambling on worthless memecoins, poured into stocks, and gouged on TCG is always in search of the next opportunity. With morale at or near all-time lows, retail capitulations, liquidations, and positions that are an order of magnitude underwater, it could not be that crazy to see something like a 5–8x across the board (from prices within 50% lower from here). 

 a) The individuals from the crypto industry having direct relations with the cabinets (Toly advising CFTC).
 b) Inevitable attempt to front-run liquidity injections
 c) Expulsion of previous brains (Vitalik selling, Kyle Samani {sort of}, and most importantly, the brainwashed KOL trash of CT)

19) DAT Unwind

The tradfi Crypto-Meta of the post ETF period.

A lot of digital asset treasury companies overextended in an attempt to cashgrab during an opportune moment for them. Comp plans and flowing capital lead to a glutonous market situation. 

DAT's entry points serve as hard watermarks for incoming buyers. Having a few of these capitulating would clear out the runway for crypto prices to gain some levity.

Is this a necessity? No. This is more of a “nice-to-have”.

Great, thanks for the onslaught of information; but that doesnt actually help much… This doesn't answer the basic question of how to actually navigate this environment.

In this era of extreme uncertainty, informational overload, and fake news, the question of “what to do” becomes evermore complicated to answer...

Or perhaps, 
as always, 
It's just a matter of perspective.

There are two philosophies that succinctly capture this perspective:

The first, is timeless wisdom from every financier's uncle, Warren Buffett:

“When there is nothing to do,
Do nothing”.

Sometimes the hardest thing to do is nothing. Especially extremely challangeing when uncertainty spikes, we have our primal impulses take over to do something… to take advantage or to secure ourselves.

Relax. 
The world you were born into is infinitely abundant.
There will always be opportunity.
Direction is more important than speed.

The second, is from one of my personal favorite glow-up stories of the modern day, Coinbase’s Brian Armstrong:

“ Do something; take action. 
Even if its wrong, it will produce information” 

Discovery leads to accelerations in course correction, helping you finally find what to actually do.

The prescription for thriving in 2026 is the same as it was, is, and always will be for ANY and EVERY year;
1) Be optimistic about a brighter future.
2) ABB — Always Be Building.

Who knows what will happen tomorrow? 
It may never come.

So hakkunah mata,
let's build great great things🥂

See you on the other side anon,
Live long & Prosper 💎

Crypto gets a bad rep.

In the heat of innovation and rapid expansion, we tend to get caught up ahead of our skis and lose the plot.

Crypto is so much more than an industry of digital tokens; it is a paradigm shift in how society operates.

A transformation of industry processes and individual freedoms.

A digital dimension of trust.

Gold 2.0;
Financial nihilism;
Memecoin supercycle;
Displacement of government.

Blossoming from nothing into a multi-trillion dollar industry anticipating continued growth in orders of magnitude, crypto is heralded as the frontier of innovation for the world’s economy, the most important and impactful technology in the history of financial markets.

From transparent supply chains to digital identities to asset issuance, the superpower of a neutral, censorship-resistant, autonomous, triple-entry accounting system (with its own sustainable incentive model) promised to rehypothecate every touchpoint of society’s digital life. To transform the fabric of commerce and resolve trust/ownership/security in cyberspace.

These lofty and opaque promises of decentralization to diffuse power, equalize opportunity, and disrupt institutions imbued the public with a frantic spirit of rebellion.

Fueled by the emotional highs of flashy headlines, parabolic returns, and geopolitical chicanery, this spirit contorts our worldview.

Rather than joining forces to solve problems, advance society, and deliver value to the world, we deviate in a PVP pursuit of shiny objects.

By all means, prosper from this as much as you can!

Just don't get lost in sauce.

Sure, it is “cool” that a random, intrinsically worthless meme can become an instrument for society to speculate on and garner billions of dollars in market capitalization.

It's also cool that your blockchain can process more transactions per second with the same level of security and reliability while keeping fees lower than the other.

You know what's not cool?

Having entire industries stuck in the same place year after year and, in turn, have their economies lag in development due to the bad associations the word “Crypto” elicits.

By slowing down and asking the right questions, we zoom out, far beyond prices, to understand what is going on in the world and remember the actual role of crypto/Web3 in the grand scheme of things.

It's impossible to anticipate where exactly the next societal paradigm shift will come from or how it will look until it arrives. Given the multi-dimensional impact of blockchain/crypto and lessons we can draw on from the uprising of the online/internet era, Web3 seems to be inevitable.

Does history actually repeat, or does it rhyme?

Web 2 — Coming On-Line

The internet has impacted society permanently and propserously.

It was a technology so fundamentally transformative that it can be likened to the advent of the wheel.

A network of electronic devices distributed around the globe sharing information, all the time, to/from any place, 1,000x cheaper and 1,000x faster than any other method of communication.

When it first arrived, the public did not know how to interpret it.

What is this for, emailing? Legacy operators in media, journalism, and entertainment either ignored or discounted it. Although a few cunning risk takers did seek to embrace it (Amazon).

As the reflexive exponential powers of network effects accelerated its prevalence, the Internet became a force of tremendous opportunity and uncertainty.

Sensational stories of total disruption surfaced; be it for bad or good, no industry was safe from the Internet. Commerce, manufacturing, education, agriculture, finance, entertainment, and even social interaction itself was about to take on a radical new form factor.

Old industries will collapse!
New industries shall rise!

Email really will displace physical mail!..

Turns out they were not wrong or right.
They were both wrong and right.

Fast-forward to today, we witness that Web 2 did not totally replace industries; it synthesized with society/economics and expanded the surface area of operations.

It gave companies a new channel for communication, new tools for coordination, a new medium to deliver solutions through, and a new facet to increase economic value.

Meetings could be compressed.
Products could be sourced remotely.
Brands could directly interface with their audiences.
Marketers could send their messages internationally instantly.

It even gave birth to radically NEW industries and business models:
- PPC digital advertising
- Paid promotions for News site
- Affiliate systems
- Paid Courses/Tutorials
- Drop Shipping

From the ~$7,400 price point of the Dow Jones at which the internet was launched in ~1993, the economy went into a prolonged period of parabolic expansion, landing the Dow Jones around ~$40,000 (5.4x in 33 years).

But this was beyond a single country.

The world economy grew its GDP in tandem, ballooning by ~4.5x in ~33 years from $24 trillion to roughly ~$108 trillion.

The Internet became a public good that grew the entire economic pie.

Yet there is no direct investment vehicle for the internet.

Just like Web 2 led to exponential growth and transformation through the online hype cycles (Internet Bubble of 2000), the same is being done with crypto and Web3.

Web 3 — Coming On-Chain

Web3 builds upon the communicative capabilities of internet technology by adding an immutable, transparent data architecture, enabling digital scarcity and ownership.

Just how the term internet is used to refer to an enormous range of the technology/companies/products, soon too shall the term crypto become a layman's term synonymous with all of aspects of the web3 industry.

On-Chain will become the next On-Line.

This is where perhaps the cognitive dissonance and identity crisis of the industry comes from; the technical and multi-cultural nature of crypto tends to have semantics escape us.

As you might have already known/guessed, the word “crypto” comes from “cryptography”. An extremely dense subject matter in computer science relating to digital communication, privacy, mathematics, game theory, physics, and software/hardware development.

Yet, due to its ~2 trillion dollar market capitalization, it is predominately used as a blanket term for digital money.

Colloquially, that is not incorrect. But the unintended consequence of lazy articulation is that all actual innovation becomes subconsciously translated to be associated with “crypto”.

Then, when something undesirable happens; such as the coins go down in value or malintentioned actors siphon out liquidity, hurt consumers, and get away with it richer, the image of the industry stains the technology.

Yes, crypto is digital money/assets.
It is also something much greater.

It is infrastructure; a meta-industry of code dictating and recording human behaviour.

A technology-first and an economic sector-second.

Blockchain is the technology.
Distributed, digital database with a very particular, immutable data structure.

Crypto is the application.
Tokens/coins, digitally native units of account.

Web3 is the movement.
Informational network of value. The adaptation of behavior.

A technological paradigm for how to share information, ascribe value, and place trust, ushering in a new era of economic growth. Simultaneously, an industry of its own and an extension for existing industries. A polymer of best practices from predecessor systems and Web3 capabilities.

Applying Crypto/Web3

If BTC is gold 2.0, what happens to gold 1.0?

Both objects serve the same fundamental role in society: the storage/preservation of value over time. A geopolitically neutral hedge against economic uncertainty. Only one tiny (not so tiny) difference between the two; one is physical and one is digital.

So that means, Bitcoin would eventually take over Gold’s market share and become the singular store of value due to its alignment of superior traits such as accountability, portability, and divisibility?

No.

From production and extraction cost to sentiment, value is a broad term.

If for nothing else than the sake of sovereignty, wealth diversification, and jewelry, people will always want tangible, valuable objects.

Gold 2.0 grows the economic pie substantially and compliments Gold 1.0

The “store of value” market segment expands in tandem.

In 2000, the entire size of the “storing value” market was floating with Gold around $2 trillion at approximately ~$290 per ounce. BTC did not exist.

By January of 2010, the market struck ~$6 trillion at prices of ~$1,120/oz. BTC was worth maybe a thousand dollars at best.

In January of 2020, it saw ~$10.0 trillion at ~$1,570 per ounce. While BTC was worth ~$732 billion (13.66x smaller).

As of April 10, 2025, Gold Marketcap is ~$21.1 trillion with ~$3,140/oz, and BTC market cap is ~$1.6 trillion (13.185x smaller).

Gold 2.0 extends the industry; it doesn't detract from or replace Gold 1.0

This goes far beyond gold.

The development of new cryptonative protocols, digital assets, and networks directly contributes to the evolution of legacy sectors.

Yes, we can launch tokens, create illustrious narratives, and speculate on them. We can also weave on-chain elements into mature, sophisticated industries and transform their processes, including things like DAOs and DEXs.

Web3 in Finance

Instant, immutable, superfluid, payment systems and products. Automating the accounting and maintenance of liquidity by deploying assets on-chain. Digitizing abstract financial instruments and fragmenting them for greater investor inclusivity.

Web3 in Real Estate

Altering asset liquidity profiles through fractionalization of ownership, enabling 24/7 market activity, and increasing accessibility to marketplaces. Leveraging a public ledger to prove ownership and a private one to store it.

Web3 in Education

Issuing certificates, credit attribution for scholastic breakthroughs, and collaborative efforts. Increase the reliability of your data. Reshape social experimentation with token-based incentive systems. Crowd fund endeavors.

Web3 in Sports

Transform the dynamics of fan-athlete relationships. Transform existing market structures from private to public by using crypto and blockchain. Give the public access to ownership of athletes’ contracts.

Web3 in Media

Offload servers to web3 networks and be compensated for usage. Ensure the pertinence of data by uploading to censorship-resistant chains.

Web3 in IP

Develop public ownership through fragmentation. Track content provenance. Enforce usage terms and automate concurrent micro-transactions for compensation.

Be it authentication, ticketing, identity, supply chain, payments, launchpads, AI art, or any other area that could benefit from security, transparency, and interoperability, Web3 technology will, in some way, shape, or form, augment it.

The Next Episode

It’s not a matter of IF, but WHEN.
It’s not a matter of OR, but AND.

There is no stopping the train of human digitization.

Tokenization will swallow the world's financial assets. Every object of value shall be tokenized.

On-chain will become the universal standard for Data. Information that is not tithed to an immutable public database will not be reliable.

The techno-anarchists’ utopia assumes a unipolar world where, “in the end,” only digital assets will exist. Very Matrix. Very Sci-fi.

While I don't have a crystal ball, I am a believer in a future where the physical and the digital exist harmoniously.

Regardless of how much Fartcoin you have; Your car will still need to drive you around, a Gold chain will still look nice around your neck, and you feel comfortable in the privacy of your own home.

Look beyond the headlines.
Look beyond the price charts.

Crypto/blockchain/web3 is permanent.

Its impact, profound.
The opportunities, prolific.

“Learn;
And then think for yourself.”

See you on-chain anon.

Life is one tremendous supercycle.

TL;DR
- Tradeoffs of informational liberty invite chaotic consequences.
- Collaboration results in exponential advancements.
- Privatize Gains, Socializing Losses

Philosophical at its core, open innovation is a socio-economic movement synonymous with globalization and decentralization that defines a model for sharing information (data, systems, architectures, and designs) without the commercial or legal restrictions that burden traditionally designed systems.

Contrary to what the short-term market movements, toxic headlines, and frantic degens on social media may say, we are alive in the most prosperous time in the history of humanity.

Clean water, resource abundance, extensions in life expectancy, and unlimited access to knowledge.

But it wasn’t always like this.

There was a time when information was reserved exclusively for the elites; when education was made available only to the upper echelons of society, when simply living in a home was considered a privileged opportunity.

Through millennia of exploration and experimentation, through the rise and fall of empires, humans have traversed the world, sharing their knowledge and trading expertise. In the process, they learned each other’s secrets to medicine, construction, and agriculture, which enabled an era of exponential growth.

By removing the illusions of scarcity imposed by geographical borders and mobilizing people through new formfactors of vehicular transportation, humanity tapped into the exponential superpowers of collaboration.

Humans tend to think linearly in a multi-dimensional world.

Where 1 + 1 + 1 in the logical realm of mathematics is 3, in the biological reality of human life, the answer is almost always anything but 3.

Variations in environments, languages, rituals, and belief systems have given every culture a chance to develop its own unique insights into the machinations of the world.

When these insights/perspectives blend together, magical things happen.

Imagine if the ability to construct housing took 95% of the world 24 months, 50 people, and resulted in habitation for up to 10 years. Meanwhile, another nation (5% of the population) was able to configure a method of building via material substitutions and process adjustments that compressed building times to 12 months, reduced labor force to 25, and resulted in habitation for up to 30 years.

By having the advanced nation educate the others, the efficiency output in construction worldwide blossoms by a factor of 5x (50% faster + 50% cheaper + 3x more durable)! Considering that this will affect 19x as many people as it had prior, the multiplier becomes exponential.

But the impact is profoundly beyond measurement in numbers.

In addition to the direct economic improvements, the acceleration in housing availability for larger portions of the population increases the baseline quality of life for society (cleaner streets, less homelessness). Moreover, the qualitative improvements to individuals that come from the psychological security in having more reliable housing frees up cognitive space for them to pursue more difficult problems/make new discoveries/otherwise advance society, instead of worrying about their living situation.

Look at it this way;

If you have a problem that takes 1,000 hours to solve and you have 24 hours in a day of which 12 can be used effectively towards solving your problem, it will take you (1,000 / 12) ~84 days to solve your problem.

But now imagine if you had 100 people working on the same problem with you. Within 10 hours, you will solve the problem, create positive reverberations of success throughout the community of people that participated, and be able to direct your energy to other matters.

That is an efficiency output of >170x versus doing it alone.

In the modern, digitized age of telecommunications, where information travels globally at the speed of light and software enables asynchronous connectedness, the frontier of exponential development exists in the atomic world of IT/telecom.

As computers began to arrive in the public’s consciousness and integrate into society in the ~1970s, expertise on the subject matter was scant.

Beyond the military and scholastic circles, very few people genuinely understood the far-reaching implications of digitization, let alone the magnitude of transformation on human life that something like the internet would have.

In the capitalist spirit of a developing world, insiders began to exploit their informational advantage of technology against the public by privatizing and commercializing all code.

Given that software is information factored into the form of digital speech and information by virtue of nature is something that belongs to the public, this was seen as a violation of moral code (and thus the constitution).

In an effort to defend human rights to knowledge, a specialist group of brilliant people, including Linus Torvalds (father of Linux) and Richard Stallman (father of GNU, Copyleft rights, and FSF), stood up against the elitist overreach at the earliest stages of the industry’s establishment.

After years of articulating the dangers to society of private code lacking universal standards, the weakness of data protection against cybercrime, the potential economic exploitations of government contracts by private institutions, and the drag on intellectual development, they won. Forever changing the trajectory of society and business by imposing transparency to enable fair ground for competition.

Granted, the birth of the open source movement did not remove the right of corporations to produce proprietary software, but it did introduce a framework that expanded the breadth of control rights and information sharing across a spectrum from proprietary to copyleft to permissive and public domain; which in turn laid the groundwork for creating interoperable, resilient systems including Linux and data standards such as HTTPS; two essential pieces of software that every device and user, interacts with, every day.

We can immediately picture important technological junctures where this can become a matter of life or death for civilization, namely the development of AI and robotics.

But there is more to this than just computers.

Open innovation imbues open source philosophies and practices throughout other subject matters/domains/industries. The surface area for compounding prosperity is endless.

Agriculture: (controlling diets)
Harvesting crop and maximizing its yield. Bio-engineering seeds and managing pests. Applying chemicals and removing them. Breeding animals and controlling dysentaria.

Medicine: (controlling health)
Pharmaceuticals processes and chemical composition. Operational procedures and disease control. Sanitization practices and patient rehabilitation.

Manufacturing: (controlling production/consumption)
Assembly line coordination and machine configuration. Material structures and supply chain management. Workspace safety and automation.

Education: (controlling social development)
Course structuring and student retention. Subject matter sequencing and classroom dynamics. Testing methodologies and career path modeling.

Absolutely every industry and domain of human life is subject to the forces of Open Innovation.

Thus, it is quintessential to understand the scope of its implications.

Solutions arrive through the unconscious crevices of the human mind, and creativity compounds through synthesis. By removing the physical borders distancing and separating people, a radical, hyper-dynamic paradigm of collective thought is unlocked.

Be it in the detection of errors, configurations of variable alignment, or the realization of addressable application space, the more eyes there are on the same problem, the higher the likelihood of extrapolating valuable insights and achieving desirable outcomes.

Reducing the threshold for entry by dismissing the stringent, arbitrary demands of certification and authorization invites a broader swath of the population to participate. Hidden talent that was suppressed for either economic or philosophical reasons becomes an asset capable of contributing to society.

Leveling the playing field enables new products, companies, and protocols to be built and compete against legacy corporations, which results in greater optionality for consumers, greater advancements in functionality, and an expansion of economic capacity.

Universal standards that are flexible and compliant across jurisdictions become material. Standards rise globally to match one another, and the balances of power even out. Humanity becomes its own auto-immune system, protecting itself from itself (such as the case with public key cryptography, operating systems, and messaging protocols). If code can exist in the public domain and not a single actor finds a way to subvert it over the course of time, the code is considered safe/reliable.

Even if nothing more than the acceleration in discovery and solution of problems is accounted for, humanity still stands to gain an order of magnitude improvement with open innovation.

Hooray!
What a dream come true!

Now that the world has embraced “OPEN INNOVATION”, humanity can prosper as we unite our knowledge and pursue solutions to complicated problems!

Not so fast.

We cannot blindly anticipate that Open Innovation is a magical pill with no undesirable side effects.

There are tradeoffs in unlocking this Pandora’s box of social liberation.

If you keep your mind too open all the time;
Your brain might fall out.

Just like any other aspect of life, parasitic human nature will find a way to manipulate, abuse, or otherwise take advantage of something beautiful.

The biggest problem of open innovation boils down to two factors: the attraction of questionable operators and the misalignment of incentives.

Yes, there are groups of benign creators looking to build innovative things for the sake of commerce or personal satisfaction, but they are few and far between when compared to the legions of malicious actors. In fact, some of the most motivated people in the world also happen to be some of the least morally obligated.

Without the standardized intellectual property safety barricades, operators unburdened by integrity scavange for loopholes and potential vectors to subvert systems in the space.

Even though open-sourced material ultimately distills into an anti-fragile version of itself, it can go for unknown amounts of time lacking formal safeguards and operational standards while the discovery process takes place. Obviously, standardization implies some degree of control, which is antithetical to the “open” agenda to begin with; but before standards can even be established, it must first be understood exactly where and how to apply them. This is literally an invitation for bad actors to come violate things.

Another, slightly more ephemeral, element is the physical byproduct of bidirectional flow. When a door is open, things can enter as easily as they can leave, and when there is movement sloshing uncontrollably in both directions, things can break.

Hashing algorithms and key management systems can become outdated as technology becomes more sophisticated and computers become more powerful (Hello MD5 and SHA1). Leaving some companies utilizing those systems at risk of a cyber attack, translating to data breaches and violations of consumer data privacy.

In systems of open innovation, 99.9% of efforts are expended towards the privatization of gains and socialization of losses.

This brings us to the pinnacle of open innovation; the purest embodiment of cypherpunk philosophies; an industry built from start to finish on a foundation of open collaboration.

Trustless, transparent, decentralized, auditable, accountable, composable.

Simultaneously regarded as the catalyst of transformative wealth and the harbringer of financial calamity, Crypto is the petrie dish of experimentation in open innovation taking place internationally between individuals, corporations, and governments of varying skill and economic status.

And as its vibrant history has shown us thus far, it is the premier example of how open innovation can be a double-edged sword.

Born from the hellfire of the 2008 Great Financial Crisis as a solution to the corrupt legacy financial system, cryptocurrency in the form of Bitcoin arrived on the scene.

An amalgamation of decades of research in monetary policy, game theory, computer science, and cryptography, this digitally native infrastructure was intended to supplement and ultimately replace the outdated and elitist predecessor banking/payments systems.

Imbued with the spirit of individual sovereignty and institutional opposition, Bitcoin leveraged the principles of open innovation as the foundation for building its reliability. An engine of trust that brought money to the internet and enabled commercial/economic activity without any intermediaries or censorship.

Quickly transcending its novelty by proving political neutrality and downtime resilience while transforming remittances and ballooning from nothing to Billions in Market Capitalization in just a few short years, Bitcoin became a symbol of hope for a more prosperous future.

Aside from a handful of political refugees, occasional family members sending money back home, and tiny pool of genuine cypherpunks/angel investors, the sliver of society most inspired by it just to happened to be the morally challenged ones.

From attempting to brute force key generation to eclipsing the chain, forking the codebase, ransomware attacks, and beyond, it did not take long for people to start scheming how to exploit the system.

Starting off lightly, free market forces found use in the pseudonymity features and lack of ties to the real world with BTC, turning it into the de facto unit of value exchange on the darknet. Illicit substances and obscene services could be engaged in commercial activity online with greater freedom.

But that was far from enough.

Hinging upon all economics being experimental, a slew of false prophets and technological clones popped up. Cryptocurrencies including Peercoin, Dogecoin, Feathercoin, Litecoin, Bitcoin Cash (Roger Ver), Bitcoin SV (Craig Wright), et al., came to market preaching sovereignty and sensationalizing their “innovations”.

Thousands of assets came and went.
Countless sums of money were made and lost.

Until we stumbled across the first real paradigm shift that accelerated everything.

Hello Ethereum.

Extending the open source principles and guarantees of blockchain beyond a single asset/accounting spreadsheet, Ethereum enabled a new dimension of applications capable of disintermediation not just the banks, but absolutely all financial institutions by bringing their systems on chain in the form of smart contracts.

Finding the first perfect product to build on Ethereum did not take long. Tools for coordinating capital, automating accountancy, and getting filthy rich with nothing more than a promise…Tokens.

By replacing the technical requirements and overhead of instantiating an entire blockchain, a much larger group of less technically sophisticated people could now create digital assets 100x faster and cheaper. Not to mention, they could do so without violating security laws simply because the technology was so young that legislation hadn’t had the chance to create rules.

ICO, or Initial Coin Offerings, took the world by storm.

Tens of Billions of dollars spread through thousands of projects in hopes of building revolutionary technology (and getting filthy rich as quickly as possible).

This propelled the industry greatly. The influx of attention spread education on the subject matter through the masses. As projects got funded, they recruited capable people, experimented with the technology, and built real products. Some of which are cornerstones of the industry 8 years later (AAVE, Chainlink).

However, the combination of novelty, unsophisticated naive users, absence of accountability to authority, and lack of tooling to conduct evaluations proved toxic. Aside from malintentioned scammers lining their pockets with the money of working class people, a class of wannabe entrepreneurs ended up burning through insane amounts of capital by simply attempting to build irrelevant things or lacking the intellectual/emotional wherewithal to navigate the space.

Nestled between the technical insanity was the social insanity. Blatant scams, including Onecoin and Bitconnect, preyed on human nature, siphoning billions of dollars away from innocent, uninformed individuals.

One would think that after 12 years of aggressive cycles of extraction, technological advancements, and social cognizance, the space would straighten out. Wishful thinking.

Riding the tailwinds of pandemic psychosis, we saw these cycles of grift come alive again in ~2021 in the form of NFTs. Tens, perhaps hundreds of billions of dollars enamoured with promises of great wealth quickly, poured into narratives of online communities and digital monkeys.

NFTs themselves are form factors for assets, frameworks for how an object is defined. Benign in nature, they are a fundamentally important element in the development of a digitally native economy. Be it for gaming, healthcare, or any other area where a hierarchical granularity in rights to data may be necessary.

Perhaps most notable event of all from this era was the FTX collapse. A regulated institution, compliant with laws on the surface and endorsed by reputable entities, imploded due to the neglect/shenanigans of its operators.

Fast-forward a couple of years, and once again, the industry succumbs to another delusional narrative of financial nihilism to supercharge the “memecoin supercycle”.

This is not to discredit the advancements that have taken place in parallel to these events.

Advancements in technology have given us a better chance to build more scalable, secure, sustainable, and fluid systems.

Populations burdened with collapsing fiat monetary models have been given alternatives. Tremendous wealth can be stored and moved globally with ease. Money can be put to work without having to reveal private information about the owner.

Regulations have been established to solidify the role of the industry on the global stage.

Even tier 1 governments have become active participants in the space.

This leads us to consider whether the costs of reduced transactional friction and disintermediation of governments have been worth the pain.

Would you rather put your money to work in the stock market, buy gold/real estate, or give it to a scammer sitting in a third-world country?

Tick question.
With crypto, nobody can force you to do anything.

Dig deep here.
If governments couldn’t stop transactions and ended up incapable of disregarding the industry, maybe there is something to be said about sovereignty.

There is one nuance that is rarely addressed but impossible to ignore. Open Innovation provides expential growth to regions that are substantially lagging behind others, while only providing minimal (and even sometimes negative) effects to leading regions.

If the world came together and resolved how to filter saltwater, the discovery would destabilize existing water company supply chains. Desert regions can experience a 10x boosted improvement by lowering their costs and delivery systems, mainland regions further from the water would stand to capture maybe a 2x by having cheaper alternatives provided, meanwhile regions that have built their economy on fresh water sourcing can be negatively impacted by having those freshwater companies lose their market shares.

That is the question…

Figuring out which one is better will ultimately boil down to personal preferences and biases.

Closed innovation is elitist.
Open innovation is techno-democracy.

One retains control.
The other leans toward chaos.

One depends on force.
The other cannot be stopped.

There is no escaping the reality that society will be more digital and connected with each passing year. That more data will be produced than ever before. That more people will have access to more information and become more intelligent than ever before. That Governments will continue abusing their citizens with fiat debt systems and violations of privacy. That people will need credibly neutral, reliable, decentralized systems to prosper.

Obviously, not everything should be open; certain system components must be made proprietary in order to drive competition.

With all said and done, when taking into account the moral implications and weighing the upside against the downside of the absence of open innovation, the answer is crystal clear.

Freedom is priceless.

Information must be open.

How much for that shiny digital gold?
Depends; who’s asking and how much you got?

The foundation of commercial activity is trading (buying and selling).
The foundation of trading is the dynamics between supply vs demand.
And the foundation of supply vs demand is pricing.

Prices of goods on the open markets are defined by producers based on a multitude of factors, including the raw costs of their product, the logistics, labor, and tax laws, and the willingness/capability of consumers.

The long and short of it is that Something costs as much as somebody is willing to pay for it. 

This leads us to ask: how do we figure out what somebody is willing to pay?

The only way is through trial and error. 

Create something, post it for sale, and collect feedback.

The key here is in the feedback part.

The quicker you can collect feedback from as wide of an audience as possible, the sooner you will arrive at an accurate pricing model (sustainable for growth while having the consumer's needs satisfied).

This works for businesses, commodities, and crypto assets alike.

Therefore, prices are not set; they are determined through discovery.

Thus, we stumble upon one of the greatest impacts of crypto on society.

Transactions have become frictionless, 
commerce has become borderless, 
and markets have become timeless.

Open 24/7, 365, and accessible by people of varying social castes and cultures from anywhere in the world at any time; crypto is a tool of social coordination and capital formation, which, in turn, makes it the ideal instrument for the discovery of prices and development of fair markets.

The open and digital nature of crypto, which leverages a slew of novel paradigms rooted in trustlessness, enable rapid experimentation and iteration; two powerful driving elements in building these pricing markets.

However, the speed and novelty of crypto bring with it extremely chaotic creative side effects. Even though it has birthed an entirely new industry now worth multiple trillions of dollars and expanded the horizons of existing markets, it has also brought with it a ton of undesirable outcomes, such as the dearly PumpFun (a mechanism for bootstrapping and launching new assets). 

We are not going to get into the moral conversations about Pumpfun here.

Pumpfun has been scruitinized by crypto natives as the engine powering the grifty memecoin “Supercycle” on Solana; and on the surface, it may be so, however, noise aside, under the hood, Pumpfun is actually a brilliant mechanism.

As a platform to create custom tokens without the need for any technical skills, the brilliance is in how efficiently it compartmentalized previously complex processes into a simple, intuitive system. 

Before Pumpfun the complexity of launching a token was modest. Some degree of knowledge in programming/computer science and/or economics was a basic requirement. 

Yes, it was able to take advantage of the performance of the Solana blockchain, which kept fees and processing times extremely low, but beyond simply deploying smart contracts, pumpfun took it a step further by integrating a handful of subtle social elements (Leaderboards/King of the Hill and followings of deployer accounts), financial elements of bonding curves for pricing and automating the deployment of liquidity pools.

The most interesting elements of all their synthesis is found in the deployment of liquidity pools.

By having a module to bring a token into circulation on DEX’s, Pumpfun acted as an abstract auction house where buyers and sellers competed against one another to achieve (or fail) a certain price/marketcap for an asset.

It actually highlighted the incredible opportunity and need for novel mechanisms and novel applications of existing mechanisms that transform how markets operate.

The pinnacle of all markets hinges upon a single concept: Auctions.

Existing for thousands of years, auctions are gamified mechanisms for offering/acquiring goods or services.

They are the models through which buyers and sellers negotiate to discover prices and the atomic economic primitives upon which human trade has evolved.

Even though we continue to use them for real estate, fine art, livestock, government contracts, and other unique situations, auctions are predominately left out of the public conscious due to the added complexity of utilizing conditional frameworks.

Typically associated with prolonged, complex, multi-party processes, auctions are the defacto methods of conducting trade activities in markets that have no history, universal reference point, or liquid index.

The purpose of holding an auction is straightforward:
- To get the seller the best possible price
- To get the buyer the best possible price

There are three general participant model types:

1) Forward Auctions
One Seller, multiple buyers.
Effective for the sale of fine art / collectible cars.

Here, multiple buyers are competing with other buyers for the object/service/good the seller is presenting. Typically entertaining due to the thrill factor.

2) Reverse Auctions
One buyer, multiple sellers. 
Effective for private enterprise competition for government contracts.

Here, multiple sellers are competing with each other for the money/to secure the deal that the buyer is willing to wager. 

3) Double Auctions
Multiple Buyers, Multiple sellers.
Effective for markets where prices are somewhat expected, things such as a crypto/stock/commodity exchange’s orderbooks.

Here, both sides place bids/asks simultaneously. Usually, these are higher frequency and less contingent on hype.

There are different auction models individually designed to fulfill their own unique purposes based on the nature of circumstance and industry.

English Auction (ascending-bid auction)
Commonly used for art, these are the most popular form of auction that is seen in movies where prices start low and rise in a step-by-step fashion as people bid in order of who is willing to pay higher than the last bidder. 

Example: Tony is selling his vintage car. A group of three people gather at his garage. Alex says he will pay $1,000. Barney then says he will do $1,100. Charles comes in at $1,200. This goes on until Alex says he will pay $5,000. Barney and Charles do not want to pay more than that, and the auction ends. Alex gives Tony $5,000 and takes the car home.

Penny Auction (ascending-bid auction)
Pay-per-Bid. similar to English auctions, where prices start low and rise as more bids come in, the unique element of a penny auction is that each incoming bid requires the bidder to pay to submit a fee. Technically, in a regular English Auction, each incremental bid can be a penny above the previous one; which can result in necessary delays. By imposing the fee, abusive nonsense is deterred, and the fees can potentially be used to subsidize operational costs or donations.

Dutch Auction (descending-bid auction)
First come, first serve. Also known as a descending bid auction, Dutch auctions start at a high arbitrary price and incrementally decrease until somebody accepts the bid.

Example: Larry is selling all of his Pokemon cards. All his neighbors come to the house want to buy it. He says he wants $10,000. Nobody responds. He says $9,800. Nobody responds. Every 15 seconds, he lowers the price by $200; until at $8,000, somebody says they will take it. Larry then collects his cash and hands over the cards.

First-price, Sealed Bid Auction
Exactly what they sound like, participants signal their willingness to pay through a method that does not reveal it to others. Participants register their bids, sellers collect the offers and, after collection, they are all opened simultaneously. The highest bid wins and pays his price. Great for preserving bidder privacy (so counterparties don’t know what other bid), and avoiding redundancy.

Vickrey Auction (Second-price, Sealed Bid Auction)
An adaptation of the regular sealed bid auction, only here, after all bids are collected and opened, the winner (highest bidder) pays the second highest bidder price. (this encourages honest bidding and minimizes the potential for extreme overpaying)

These are just a few of the more popular models. There are numerous nuances and modifications of models that either mix/adapt elements of the above-listed ones or introduce other factors such as timing, bid privacy, settlement prices, and reserve thresholds to augment the outcomes.

But this isn't an educational post on different auctions.

The purpose is simply to illustrate that auctions are flexible mechanisms that can be integrated into nearly any situation where buying and selling occurs.

Which brings us back to Crypto.

From Parachain Slot auction held by Polkadot, to the multitude of projects that conducted ICOs/IDOs/IEOs, to the CEX stake-to-earn programs, the validator competitions in consensus mechanisms, and everything in between, auctions have been the breeding ground of experimentation in crypto.

However, the vast majority of these experiments have been heavily skewed toward users deeply familiar with technology or finance, leaving the vast majority of market participants sidelined.

Besides Pumpfun, retail has only really had a chance to interact with crypto native auctions in the more traditional sense, predominately in the NFT segments for PFPs, art, gaming material, and other strange (arguably worthless) digital objects on platforms such as Opensea.

Perhaps this was for good reason.

As can be seen by the amount of capital destruction that took place in the 2022–2023 NFT bear market, the timeless wisdom of price not always being equal to value and the inevitable reality that prices will always return to their “real” value over the course of time is a bi-product of market forces.

On the fungible side of things, we arrive at the same conclusion after witnessing the memecoin and AIAgent mania of 2024. Hundreds of billions of dollars in market capitalization arrived and disappeared within mere months. 

Maybe there was no genuine innovation behind bidding below the floor price on collections of monkey pictures or live-streaming crude content in an attempt to pump a token’s price.

BUT!

Both things have a common thread between them.

Auctions.

Auctions invited massive speculative capital which propped up markets.
Auctions gave people a chance to become a part of something.
Auctions brought thousands of new users into the space.
Auctions distilled the valueless from the valuable.

As a matter of fact, auctions (double-sided) have been, and continue to be, the drivers of all crypto markets today!

Yet, we still can't seem to figure out a fair price for things…

Volatility continues to consume the industry, and there seems to be no cure.

That is because there is no problem to cure.

Price is relative.
Price is discovered over time. 
Things change over time.
Thus, prices change over time.

If we want/expect crypto to achieve its ultimate promise of a form of value and for blockchain to truly become the rails of truth upon which the world’s value transacts, we must push forward with more experimentation.

Markets are the most efficient they have ever been.

The very definition of commerce is evolving, and the form factor is becoming all the less traditional.

As we continue to accelerate into a more digital and connected world with a geopolitical shift that is redistributing power and transforming how value is ascribed, we will constantly require novel mechanisms upon which to develop markets and establish prices.

We may not know how exactly the future will play out…
But there is one way to predict it most accurately…

By building it ourselves.

So go out there and experiment like never before!

Do you want to be in control of your finances or what?
Do you want to have the freedom to access you money wherever, whenever you need it?

Awesome!
Have you heard about Dog Wif Nail Polish; its a new memecoin on solana…

There is a single economic law that governs all markets:
Supply Vs Demand.

Supply in crypto is superabundant.

Fungible, Non-fungible, Stablecoin, Governance, Meme, Proof-of-Work, Proof-of-Stake, and so on; there is no shortage of new tokens spawning on a daily basis.

Just to put things in perspective, in 2017, there were roughly ~10,000 crypto assets. As of February 2025, there are over 11,500,000 and their growth only seems to be accelerating.

When supply outpaces demand, attention gets diverted, and liquidity gets spread unevenly, making for thin order books, causing prices to experience extreme sensitivity to selling pressure, which ends up resulting in aggressive downside movements (usually permanent ones).

When demand outpaces supply and maintains it over the course of time, we get Bitcoin.

By coupling careful economic design that takes proper consideration of supply dynamics with powerful, maximally simple technology that is philosophically aligned with society, a loyal community is bred, which kicks the flywheel effect of liquidity, begetting liquidity, and real demand consolidates around genuine assets.

There is no magic trick; the single factor that separates quality and ultimately dictates success is demand. Period.

As straightforward as it may seem on the surface, demand is actually a multi-dimensional principle with layers of dependencies and degrees of subtle nuances.

In other words, there are levels to this thing.

Demand tends to move uniformly throughout assets in relation to the most fundamental primitives associated with a project/product/economy.

There are two types of demand primitives: direct and indirect.

Direct relates to demand that arises from within a narrow niche sector. This can include things such as the desire to use an application, which translates to demand to own the application’s token, which in turn translates to demand to access the network it is built on, which translates to demand for the network’s token.

Indirect demand relates to demand that arises from independent macro forces such as money printing, interest rates, sovereign policies, and political regimes.

Both types of drivers are also reliant upon one another.

Things like monetary policies will impact the state of free-flowing/excess capital in the hands of the population, which will determine the public’s risk appetite, which indicates the types of assets likely to attract capital. Inversely, as higher-risk assets begin to rise without fundamental changes in available public capital, that indicates sophisticated market participants are expecting that capital will soon arrive in the hands of average retail and are front-running them.

As it pertains to crypto the ultimate levers of demand are rooted in the simplest of habits of human nature; the pursuit of pleasure and avoidance of pain… Both of which are triggered by narratives.

The overarching giganarrative applicable to both levers is Sovereignty. The protection from and opposition to government.

The overarching narrative on pursuing pleasure is perfectly Lambos, Rolexes, luxury trips, attention from attractive individuals, and recognition from friends and family. The desire to be right and profit from it. We call this gambling.

The overarching giganarrative on the avoidance of pain refers to the avoidance of FOMO. Watching other people make life-changing money elicits the desire to not be thought of as a fool and be left sidelined. We call this capitulation (losing integrity with one's self and top-blasting the entire portfolio).

To understand how to drive demand, we need to first understand how demand looks by identifying where it is coming from. Since the metric of demand is predominately expressed as buying/selling pressure and liquidity, the correct frame for identifying the source/origin of demand is to ask the question of WHO.

For the sake of keeping things simple, the who exists across three general categories:

Builders
These include individual developers tinkering around building tools, companies building real-world revenue-generating products, hackers looking for cracks to subvert systems, content creators writing epochs to spread the message, small teams in garages whipping up DEXs, bridges, and all sorts of other smart contracts.

Retail
The supermajority. The reply guys and KOLs on crypto Twitter. The memecoin investooors, NFT connoisseurs, speculating apes, and 100x degen gamblers. Also commonly referred to as the “bag-holders” or “Exit liquidity.” The speculators looking to bolster returns, escape the matrix, and scratch the itch of belonging to a community.

Institutions
These are the corporations diversifying their balance sheets with cryptocurrencies, Enterprises deploying tokenized debt obligations, and Governments turning volcanos into Bitcoin mining rigs.

*** Here, we omit the multitude of interim participants, including market makers, exchanges, service providers such as node infra and cloud servers, and others.

So then HOW is demand driven in crypto?

Obviously, by propping up a memecoin with insider liquidity, getting an influential person’s endorsement, and spamming replies with toxic “community” bot techniques….

Jokes aside, demand in crypto is driven the same way it is in any other area of life. Marketing.

We are not going to dive too deep into the moral implications of marketing, but we will just highlight that marketing is, by virtue of its nature, designed to manipulate emotions.

In an effort to prey on human nature, it boils down to choosing a method (attracting or forcing).

Attracting is the slow-grind method of organically building good products and communities. These take very long periods of time to build trust but create everlasting impacts and, at some point in time, become reflexive, self-sustaining super systems.

Forcing is using sleazy tactics to create a fake illusion that something is more valuable than it is. These are cheap, short-lived, and highly destructive methods that would best be understood through a DYOR looking at the cases of Argentina’s Memecoin and flipping through the countless stories of pumpfun.

Regardless of which marketing method drives the demand, it is important to the nature of the demand itself; here, we are talking about the form factors that measure adoption.

The most common, and incorrect, way to gauge adoption is by price. This slightly better way is through liquidity. Liquidity is the cornerstone of financial markets and the single most important metric when evaluating the economic well-being of an asset/asset class. Aka the desire to own [buying pressure], and the desire not to let go of [selling pressure].

When the price of crypto is moving up, it creates a visceral psychological loop in people's minds that the crypto must be valuable, and it becomes a self-fulfilling prophecy of price growth. The inverse applies to price depreciation; when the number goes down, people assume the project is no longer in demand.

While there is valuable truth to this, it is not the entirety of the picture.

As a technology-first, pseudo-economic innovation, demand in crypto is much more complex with vectors in finance and technology. A non-exhaustive list is as follows:

- MAU (Months Active Users)
- DAU (Daily Active Users)
- Total # of on-chain addresses
- Total # of Smart contracts
- Total # of Transactions
- Total # of developers
- Hashrate
- # of miners
- Amount of tokens staked
- # of Nodes
- On-Chain Volume
- TVL (Total Value Locked)

The list and the amount of ways to interpret the according data is tremendous; the challenge that has yet to be adequately overcome is understanding how much of this demand is truly organic and synthesizing it with other drivers to genuinely grasp the state of a project.

Regardless of what it is that ultimately drives demand, the most important question to understand of all to always be asking is “Why”.

As difficult as it may be at times to ignore the external noise, give yourself the right to intellectually explore the underlying substrate by diving deep into the logical reasoning.

Why do I want to buy this?
Why do other people see value in this?
Why would somebody want to sell it?
Why would somebody want to own it?
Why does somebody think that other people want it?
Why would a project want to build on this network?
Why wouldn’t they build on another network?

Understandably, this is a steep slope as it gets even more difficult to sometimes dismiss your own biases and not get drawn down into a recursive loophole of questioning that causes decision overwhelm called “analysis by paralysis”.

Just understand that when you can control your impulses and genuinely explore the deepest, darkest corners through the question of why, without emotional attachment, you will at some point reach a point of final decision.

Being early is not always better,
It's not about being right,
At the end of the day what matters is winning; and winning happens when you are willing to be wrong for the sake of being profitable.

Now, let's go out there and demand greatness 💫

See you on the other side Anon 🥂

After the highly anticipated arrival of America’s new crypto-loving leader, we thought that prices would just go up.

New macroeconomic forces driven by a new political paradigm would be the fuel for new market participants to flood into crypto!

But things didnt go quite as planned….

Alts getting slaughtered,
Presidents rugpulling memecoins,
and Crypto Twitter is having a meltdown.

So what happens now?
Do tariffs remove the value of borderless money?
Does institutional ETH acquisition mean the asset is now dead?

In an attempt to make sense of the hustle and bustle of influencer marketing, celebrity grifting, and geopolitical drama, we unconsciously exhaust our cognitive capabilities and fall into the traps of human cognitive biases.

We lose sight of the bigger picture and allow impulse to override our time preferences.

By slowing down, taking a step back, and remembering the big picture, we can process things with a clear mind, accurately assess where we are, and make quality decisions about taking the next steps forward.

So please;
Sit back, lockin, and let's let the good times roll.

Crypto is a radical, irrational, and fast-moving industry.

Being involved/overexposed to intraday price volatility is emotionally abusive, and alongside the titanic influx of information, it becomes difficult to distinguish between noise and signal.

Its open nature and relative youth creates an environment where novelty rules and quality get overlooked.

After 24 months of tremendous expansion, led by the duet of Bitcoin’s stability and memecoin absurdity, we have arrived at the final chapters of the crypto cycle… Or so it seems.

Human biases lead us to believe we can predict the future based on the past, and maybe, to some degree, we can. However, we tend to over-index our assumptions and discount the fundamental forces at play in the moment.

With governments and corporations entering the fray by building their balance sheets, institutions launching ETFs, and radical expansion of awareness, we need to understand the type of capital, the sophistication of market participants, and the endless experimentation have augmented the landscape.

The forces that brought the industry to this level,
are not the same forces that will take it to the next.

Well, to be more accurate, the game didn't change, but the rules have.

Building on the capabilities of the internet to transmit information instantly anywhere in the world, Crypto fundamentally transforms the systems of power governing human social life and applies universally across domains/industries.

Through an eloquent weaving of immutability and auditability, it has displaced the vehicle(s) that people use to facilitate the transfer and storage of value (AKA money) and ushered in a new era of finance/economics.

It has given a new form factor for humans to coordinate in cyberspace and enabled the diffusion of power in hierarchies of power by superimposing transparency.

Its underlying technology, blockchain, unlocked the capacity to create a colloquial “fabric of trust” in the digital realm. This, in turn, has provided us with ownership and data provenance, two subtle elements that play an existentially important role in building safe AI.

As one of the pillars propelling humanity towards singularity, “the game” of crypto is larger than any individual, corporation, or even nation-state.

We need people to come together, change their habits, and rehypothecate value. To build technology. To go against the grain of old behaviors and embrace sovereignty. To trade short-term comfort for long-term freedom (trading pun intended).

When we think of impact on this kind of scale, we must understand that the gestation period for this to materialize is long. Changes to the infrastructure take time not just to be built but also to be integrated, challenged, adjusted, re-evaluated, adopted, and only then does it materialize.

This is a very messy, chaotic process.

Just like a hockey puck on ice,
A soccer ball on the field,
A wild boar in the forest,

Crypto is a moving target, specifically its narrative.

To hit your target, you must aim/move to where it is going, not where it is right now.

Bitcoin’s narrative has been digital gold.
To achieve this target, it must eclipse (or at least match) the market capitalization of gold.

As can be seen on the charts, this has not happened… The job’s not done.

On the other hand, we have altcoins, where the narrative changes at the speed of Kanye’s tweets.

Kill Ethereum,
Cat coins to $100 Billion,
AI agents to rule them all…

Granted, crypto is a multi-dimensional, multi-player game that, like every other element of the human experience, is subject to cyclical forces of nature (be they manipulated by humans or not).

Nevertheless, none of these shifting narratives have materialized.
Nearly all of them have changed or been disproven.

The most poetic thing of all is the subtle underlying macro trend: The less the narrative has changed, the more trust it has built, the more reliable it has become, and the healthier it has been for a portfolio.

And success here varies depending on what role you are playing;

For traders, it's about the dopamine hits;
- you must predict the next trend before it happens.
For builders, it’s about project adoption;
- You need to show people what they haven't seen yet.
For investors, it’s about generational wealth;
- you need to stay convicted and weather the storm.

Hurry up,
and Slow down.

When in the heat of battle, navigating crypto can be daunting.

When prices rise, everybody is happy, nobody has time to even care about the grifters.

When prices are falling, people lose their minds, blaming everything but their own decisions.

Timeless “wisdom” from disparate walks of life clashes;
Let your winners run; cut your losers quickly
If you don't hold, you won't be rich

In the words of our industry, “Go touch Some Grass”.

When the mind is resting, you can take the time to process thoughts and emotions. Growth happens not during the action itself, but after it has been digested.

Eating food doesn't make you fat.
Digesting it does.

Lifting weights doesn't grow muscle;
Resting does.

Hone in on the undeniable, universal truths underpinning macro trends;

Yes, society is digital and will only become more digital moving forward.
Yes, trust will continue to be the most important factor in asset allocation.

Your best bet is to experiment as much as possible to optimize your trajectory and, through the process of elimination, expand your skillset and comprehension of the wild variance and volatility of society.

Having some exposure at all times and gradually building up a position is the healthiest/most balanced approach.

Believe in something.

I don't think the cycle is over.
But I have NO idea how it will play out.

Sideways, Up, down, inside-out, up again, down again, then new ATH, and then finally…..

Will Bitcoin go to $1,000,000?
Will Ethereum really become the “world computer”?
Will Memecoins really be the frontier that builds retail wealth?

Who knows.

But there is one thing that I suggest on a personal, friendly note;

The amount of grift is despicable. Every time the industry starts performing well, some “guru” shows up and starts contorting newbies' realities by playing the Broken Clock game and just relentlessly bull posting; or worse yet, shilling absolute trash.

99.9% of them are paid to hype and market.
99.9% of them don't care about you or society at large.

Listen to them if you must, but do not depend on anybody else's opinion to run your life. Do not try removing the responsibility of the hard work and accountability from yourself.

When there is a wave coming, the tide must pull back.
The further back it pulls, the larger the wave.

It only feels right to end this with one of the most famous and underrated modern quotes of all time:

You miss 100% of the shots you don’t take.

If you heard that one before, that's great, but did you act on it?

The ultimate purpose of education is not knowledge but action!

What a time to be alive…

Let's go make history Anon 🥂

Being the single most important technical indicator when it comes to crypto (and financial markets in general); price action will help you build a mental model of the markets state and help your enemies outperform you.

On the surface, PA (Price Action) seems like a simple, intuitive concept that is exactly what it sounds like: a pattern created from the movement of an asset’s price over time.

That is correct…
And at the same time, it is also something much greater.

Composed and influenced by a smorgasbord of ancillary indicators (price, volume, open interest, funding rates, etc.) while being tightly coupled with the fundamental first principles of financial physics (Direction of price over the course of time), Price Action is the purest expression of the underlying psychological substrate in market participants.

It is the foundation that builds and defines trends.

It is the King of all indicators.

In theory, the logic of buying means acquiring from the open markets, thereby reducing its available supply, driving up its scarcity, and, in turn, the price. The inverse applies to selling, whereby more of an asset comes onto the marketplace, making it more accessible to more people and driving prices down.

But it's not quite that simple… 
The nuances applicable to price action are mind-bending.

Price can be/is influenced by external factors such as the relative value of a trading pair, the psycho-social profile of the participants involved, the state of the industry, the state of the macroeconomy, as well as, internal elements such as supply policy.

Ultimately, when price goes up, that means there is an influx of demand to own an asset that outweighs the desire to sell it at that given point.

When going up in the short term, that is a signal that capital is flooding in. However, understanding the intentions of that capital is very difficult.

Players can utilize alternative vehicles (such as a short) to create an illusion in the order books to make it seem as though demand is coming in, but in reality, the intention of that demand is to bet on its price falling. Moreover, occasional liquidation events (short squeezes) can cause parabolic price movements by forcing buyers to acquire the assets at market price.

Therefore, short-term price spikes are a weak/unreliable source.

On the other hand, when the price goes up consistently over a prolonged period of time, that is a much stronger signal, which can be interpreted to mean that buyers are allocating their capital with faith in the underlying asset’s prospects in the future.

Here a rule of thumb is liquidity begets liquidity, the longer the amount of time an asset spends growing, the more attractive it becomes to the primitive human mind to assimilate it as being reliable. This can enter a flywheel and bring an asset into permanence (such as the case with Bitcoin).

A non-exhaustive list of buying pressure logic is as follows: 
- The corresponding asset to which the value is tied in a trading pair is depreciating, thus creating an economic disbalance.
- Macro-economic factors such as interest rates are going up, allowing people to take on more risk
- Marketing hits critical mass inflection, and a narrative sticks
- Insiders are manipulating the price to get 
- Players are hedging their short bets

Ultimately, when the price goes down, the desire to own an asset is weak, and in the absence of new entrants, while existing owners are leaving their positions, it results in devaluation.

As is the case with prices rising, there are two time frames relevant to prices falling: long and short.

Going down in the short term signals that capital is rushing out. However, understanding the intentions of that capital is very difficult.

Market participants that are taking on large positions empty the order books, and automated algorithms of market makers register that movement as a slip, causing the price to go down as they rebalance the spread. Moreover, as new positions are taken out, it is in the interest of the market operators to suppress the price further to dissuade the participants as quickly as possible in an effort to have them leave quickly, in turn harvesting their fees on the trade. 

Again, short-term price is a weak/unreliable source.

On the other hand, when prices go down consistently over a prolonged period of time, that is an indicator of some sort of fundamental model/business failure.

A non-exhaustive list of selling pressure logic is as follows: 
- the asset is in low/no demand,
- failure of economic/business model
- Existing stakeholder are losing their confidence in the asset (due to competition, incompetence, or any combination/slew of other reasons)
- Insiders are manipulating the price to force out retail and get better entities
- Macro-economic factors are lining up in an unfavorable way
- Players are hedging their long bets

While in traditional markets, there is some degree of accountability to regulation, in Crypto, it’s a free-for-all, creating a chaotic displacement that makes it seem that logic is either inversed or just downright nonexistent.

When you sell, price goes up.
When you buy, price goes down.

Why?

Three general reasons, each with its own multitude of constituting factors; 
1) PVP nature
2) Market Maturity, 
3) Organic or Not Organic 

Price Action is widely recognized by sophisticated market operators to be very influential, thus making it the perfect tool for manipulation. PA is highly susceptible to be used as a weapon against unprofessional/novice market participants.

As a highly Player-Versus-Player industry, all financial markets are full of cold-blooded actors with very unfriendly intentions. If somebody has an edge over somebody else, they will take it. Your loss is quite literally somebody else’s gain. 

Nowhere is this more prevalent than in crypto (especially memecoins).

A very effective way to frame one's thinking of a PVP environment is through the lens of a zero-sum game.

In zero-sum games, where winners take all, and losers are left with their pants off, risk management becomes the most important element of conversation. As human nature and societal conditioning will show us, people (the human animals) are not inclined to manage risk. 

Professional actors that have been conditioned by the brutal nature of financial markets will take advantage of this to extract resources from the untrained. In crypto, this usually takes the form of emotional manipulation on social media. The echo chambers of Twitter/X are overwhelmed with botnets and pseudonymous alt accounts that will jump from conversation to conversation, relentlessly promoting their trashcans by demoralizing those who stand against them or creating a false sense of security by praying on the human need to belong and building narratives of community belief. 

Never forget that the MOST valuable thing that ALL humans are looking to spend their money on is HOPE.

The Maturity of a Market is a very important factor to take into consideration when assessing PA.

Young, aggressive, open markets, especially those of memecoins, are less likely to be dependent or expressive of genuine PA. Primarily because here each individual dollar is more impactful. Malicious intentions aside, because there are smaller groups of participants, which in turn means smaller pools of liquidity, the amount of influence these actors have on the markets is much more profound. 

In markets that have stood the test of time the amount of participants and the pools of capital involved are much larger; meaning that the impacts of buys and sells here are much less profound. 

This feeds into the point on the degree to which a market is organic (or not).

Price action is actually a phenomenal tool to use when assessing whether a market is organic.

Here, unlike the previous section, short-term reaction is the indicator.

Organic markets will be more fluid in their response to actions. If buying pressure comes in to drive the drive up, it will accordingly ascend to match that point, and if a lot of selling comes in, it will descend to that level. 

On the other hand, if a market acts inversely, it is safe to assume these markets are subjected to insider intentions and are not organic.

Food for thought:
Are any markets on this planet organic? If so, for how long?

There are infinite combinations of price patterns. Among the most popular ones are Head and Shoulders, Cup and Handles, Adam and Eves, Double Tops, Triple Bottoms, Dead Cat Bounces, Ascending Triangles, Bullish/bearish Pennants, Elliot Waves, Wedges, and a multitude of others. But for the more technically inclined day traders and gambling savants, there is an absolute treasure trove of things, such as Three White Soldiers, Shooting Stars, Dragonfly Dojis, Diamonds, Cloud Covers, and so many more things that can have any normal person’s head spinning.

Ultimately, there is no universally correct way to interpret price action; different traders, different markets, and incentives, among other ever-evolving factors, will result in discrepancies, especially since many of these patterns have become “standardized”/common knowledge and are now much less reliable than they were before.

Plus, markets are full of noise that disrupts signals and makes it much more difficult to understand how to act.

Like all other indicators, price action shows what has happened, not what is happening. Even though it is probably the strongest of the bunch, PA is only one small piece of the bigger picture.

Even though PA is king, the game is much more complex than a single player. 

Every king has a queen,
Every king has an army,
Every king has his domain.

If you want to win… don't rely on the king to take you there, but don't ignore him.

Besides, the timeless wisdom of the markets has taught us that price and value are not always the same thing, and when the price is below the value, there are tremendous opportunities for those willing to wait.

Bless you,
and good luck 💫

As the world continues to burn in front of our very eyes (at least according to mainstream media), something transformative is happening in an evergrowing pocket on the outskirts of cyberspace.

Riding on the tailwinds of 2024’s glory, the tectonic plates of society are shifting right beneath our feet and ushering in a new era for the crypto industry!

From Trump’s victory and Trudeau’s resignment to Gensler's upcoming departure from the SEC and the radical actions of the South American presidential dynamic duo (Argentina’s Milei and El Salvador’sBukele), the geopolitical state of the world has become/is becoming much more friendly to techno-economic experimentation.

While in the moment and on the surface, tremendous noise is disrupting signals that can momentarily derail us, the truth of the matter is that this cycle is VERY similar to previous ones, so much so that, in fact, it has fractal traces of them all, making its perception totally different.

Like a volleyball held underwater, it is only a matter of time before the confluence of bullish factors drive the market to new highs. A shorthand list of these factors include the FTX estate payouts (People need to throw that capital into something to recoup their losses, a new regulatory regime powered by speculation of QE & YCC (Trump’s policies for positioning dollar, tariffs, interest rates, and immigration), instability in other leading economies such as the UK and China (Citizen capital needs an outlet) all align to produce an epic finale to this cycle of crypto…

So, without further ado, let’s whip out the crystal ball and take a peek at what 2025 has in store for us:

Disclaimer:
* These are in no specific order.
** Nothing here is investment advice.
*** These are not to be used for making financial decisions.

Nothing is more accurate at expressing the state of the crypto industry than total Market capitalization.

Starting the year at $3.28 Trillion, with BTC representing $1.88 Trillion (~57.4%), stablecoins $220 Billion (~6.7%), and altcoins around ~$1.18 Trillion (~35.9%); it feels as though regardless of short-term volatility, we are on track for a clean 2x and beyond.

Similar to previous market cycles, it is best to assume that all three categories will expand in tempos similar to cycles past. Personally, I am anticipating the largest relative growth in Altcoins, followed by stablecoins, and lowest for BTC.

While the exact timing of when the growth happens may be near impossible to guesstimate, and the large, prolonged capital rotations between sectors and cabals causing irrational fluctuations will cause noise that discombobulates the charts and imposes psychological dismay, expectations for MCAP will tap the $7–10 Trillion range at some point is totally within reach.

Conclusion on Marketcap Expansion:
Bullish. Up and the right, with a lot of volatility in between.

HAH, Got eeeem.

Slamming across every Twitter feed, YouTube short, Instagram reel, TikTok stream, and even cover stories of mainstream media, Memecoins have blasted through the socio-financial stratosphere and made their way into the consciousness of the masses.

After all, 10,000% gains within 7 days are hard to ignore.

People have posited sophisticated theories of financial nihilism and credited memecoins as being a supernatural phenomenon materializing the financialization of culture.

These have been underscored by the incredible success of things like DOGE, PEPE, SPX6900, GIGA, and MOG, among a select group of others.

Some people have made life-changing money on them.
Some more shall do the same.

But almost everybody else will, in fact, lose money on them.

The fundamental value propositions of memecoins (or lack thereof), the surplus of anonymous actors, and opaqueness regarding responsibility result in a toxic nature of fast money. Which results in capital destruction.

I want to believe in the Memecoin SuperCycle… but I personally do not. Memecoins are here to stay, but they will not be the drivers of salvation they claim/many assume them to be; they are digitized lottery tickets.

After nearly capsizing with a 99% drawdown and the destruction of billions of speculator dollars, we fast-forward to today and see that NFTs as a category have matured tremendously since their boom times in 2021.

To be clear, a “return” of the NFT market does not mean that existing legacy collections of 10,000 monkey PFPs will rise to their hypomanic levels (although this is always on the table). However, we have already begun to see impulses in some outliers, such as Pudgy Penguins and their kin that have 2x’d in the last year alone while conducting arguably the most successful memecoin launch to an NFT community. But, generally speaking, a return of the NFT market refers to the type of assets that will begin to attract a lot of attention.

It could be 1-of-1s.
It could be AI-generated art.
It could be in-game items.
Possibly phygital goods.

The surface area is tremendous, and with the improvements of UX in wallets, the potential to attract resources here is endless.

As market capitalization of the broader industry rises and excess money begins sloshing around the hands of the mal-intentioned or inexperienced, rampant speculation will rear its head once again… and where else but the grayest of all sectors?

NFTs are still so far removed from regulation that they just so happen to be the perfect vehicle to create vaporware with the smallest chance of a potential legal recourse.

If/when NFT’s get their time to shine again, that would be a strong indicator of the cycle’s final chapter… Bullish for the Bears.

Insanely hyped at the moment, but long term, absolutely transformative to facets of life beyond just crypto; AI agents are the hottest narrative controlling the vast majority of mindshare at the start of the year.

Current platforms, such as Virtuals, Vvaifu, and Griffain, allow people to launch their own digital agents tithed to a token. Even though the narrative is very young, it has grown exponentially on the back of last year's AI hype and the pumpfun launch mechanism. Agents are coming online by the minute AIXBT, AI16Z, Aimonica, and so on.

While, at the moment, these tokens don't carry intrinsic value, they seem to be the stomping grounds for speculating on how humans can have AI agents generate value for them in the future.

The cycles Wild Card. The potential here is equal to, if not greater than, memecoins. Glorious pumps are very possible, as are incredible dumps. I wouldn't be looking for any long-term positions, but it might be worthwhile to find short-term solutions to bolster portfolio value.

This is a very touchy subject in the world of crypto. Some think regulation is good; others vehemently oppose it for being antithetical to crypto’s open nature, and yet others demand a balanced approach with varying degrees of regulation. Regardless of which side you take, regulation is inevitable.

Since the birth of Bitcoin, a series of cataclysmic events, from Mt. Gox to FTX, 3AC, and beyond, have brought to light the parasitic nature of humans to partake in fraudulent, mal intentioned, or just simply unintelligent behavior when operating with open systems. This has resulted in tremendous pain for market participants and caught the eye of regulators from all parts of the world.

Policy has been the leading topic of conversation for many years now, yet it continues to lack anything concrete. Given how fast the industry evolves, lacks universal standards, and how slow policy implementation generally is, this actually makes sense; in order to understand how to regulate something properly, one must first understand what that something is and how it actually works.

While some countries, such as the UAE, Hong Kong, El Salvador, and Singapore, among others, have been developing regulatory frameworks in an attempt to lead in this area, America continues to be the dominant force which the world follows.

Promises made by the incoming presidential candidate of a new regulatory regime free of the previous party’s SEC snake, Gary Gensler, is a step in the right direction. Coupled with the introduction of the presidential “Crypto Council” and the transfer of oversight from the SEC to the CFTC alongside potential deregulation, 2025 is shaping up to be very favorable on the policy front.

Goodbye, operation ChokePoint. Regulations passed for crypto in 2025 will be both extremely positive and permanent. Becoming the bedrock that shapes all future regulations and influences how other nations design theirs.

One of the most anticipated knock-on effects of regulatory clarity is the freedom for corporations and governments to enter the crypto game beyond facilitating transfers, trading, and custody.

Starting at the enterprise side of things we have Coinbase. In addition to a nearly 10x growth of their stock price from the bottom, the launch of the Base L2 network and its tremendous success last year highlighted the commercial upside for legacy corporations to build applications, communities, and even chains of their own.

Many entities caught on to this and are following suit, with Robinhood’s Web3 Wallet, Kraken promising its Layer 2 network, and a plethora of others looking for novel ways to get involved.

In addition to this new multi-dimensional form of adoption, there is an increased influx of desire from legacy financial institutions willing to experiment on-chain. Entities including the likes of Franklin Templeton deploying tokenized government bonds, Paypal launching a stablecoin, Bank of America using Ripple ledger for internal transactions, the smorgasbord of issuers creating ETFs (BlackRock, Fidelity, VanEck, et al.), and, of course, MicroStrategy continuing its Chad activities by blasting all the more BTC onto their balance sheets. These are all old news that have set the stage for newcomers. The amount of new capital from globally recognized and reviewed entities vying to get involved is growing exponentially. 2025 will be their year.

Building on the momentum of the expected increase of multi-dimensional participation from corporations in the Web3 space, 2025 is primed to be a year of unification.

Seeing early hints of this in 2024 with the acquisition of stablecoin issuer Bridge by payments giant Stripe and the trilateral fusion of AI crypto projects FETCH, OCEAN, and AGIX into ASI; Mergers and Acquisitions will be broadly applied across the board, on-chain intra-sector Layer 1’s, AI’s, and especially Layer 2’s, as well as off-chain hybrids including wallets and exchanges.

While some entities are plunging headfirst into the development of their own solutions, many others that lack the human resources (intellectual workforce or professional insights) but have the financial capability will attempt to speed up their go-to-markets by acquiring existing projects/products.

What seems to be the most “obvious” area for crypto-native mergers to take place is the Layer 2 space. Over the last 24 months, there has been a Cambrian explosion of L2s coming to market, most with EVM compatibility and most with their own native token. The arrival of all these L2s has shone light on two key byproducts: the unintended techno-economic burden of fragmentation data publishing by flooding the L1s with low-value blocks and questionable appetite for their tokens.

Regardless of what terminology is used, appchain, L2, side-chain, subnet, parachain, etc, the case is clear that performance improvements on the user’s end are needed, but the overwhelm of options makes little sense. The industry can consolidate/bundle these scaling solutions to aggregate liquidity better, reduce communicative overhead by minimizing the amount of cross-chain messaging, and turn its attention to other areas.

This one is a little bit further down the opposite assumption possibility curve, but its implications are profound.

After the launch of Ethereum’s ETF the markets have forever transformed and unlocked the potential for a much broader spectrum of alternative digital assets to enter the fray.

The most apparent contenders next in line for an ETF are SOL, LTC, XRP, and maybe LINK or DOGE. Given how small all of these names are in nominal Market cap terms relative to BTC and ETH, the associated capital inflows, even just the speculation about them, can result in face-melting price action.

Given that some jurisdictions (Brazil) have already launched altcoin ETF products (for Solana) and five major entities in the US (Grayscale, VanEck, 21Shares, Bitwise, and Canary Capital) have submitted their filings for 2025, it seems like the perfect time for the US to deploy its own.

Being the largest, oldest, most reliable and most valuable asset in the crypto verse, Bitcoin’s full economic potential has yet to be tapped. Its dominant designation as a store of value that isn’t subject to the same velocity as typical money makes BTC a truly pristine form of collateral for DEFI.

Layer 2 solutions such as Stacks, Merlin, and Rootstock are looking to extend the Bitcoin network with programmability and compatibility with adjacent networks. Lighting is looking to scale transactional throughput. Babylon is experimenting with a staking adaptation to bring BTC to other networks and generate yield without forfeiting custody and minimizing counterparty risks. Things like ordinals and inscriptions brought a semi-native form of NFTs to Bitcoin and pumped out crazy numbers, which bolstered transaction fees and presented a new vector for strengthening the security budget. The amount of innovation taking place to leverage the security of the Bitcoin network and/or the value of BitCoin’s BTC units has not been receiving the attention it deserves.

Perhaps the most important aspect of the BTC environment is that after his short 16 years of existence, this once-proclaimed worthless pet rock has broken through the fundamentally important, round, psychological price level of $100,000. In doing so, it has unlocked the potential for it to now move through the undiscovered 6-digit area without the public denying such a possibility.

With the maturation of technology, the decreasing relative return potential of BTC, and influence of prominent OG Bitcoiners, 2025 might finally be the year where things come together.

One of the strongest components in the speculation of crypto right now are the government strategic reserves.

Trump has been vocal about his support of the digital economy; after his confirmation of intentions to commit to the creation of the reserves (which he likened to a replication of Oil reserves), absolutely cosmic numbers began floating around. Forbes went so far as to proclaim a 15 Trillion Dollar Boom.

While the world waits for Trump to take office on January 20th, other governments decided to pounce on the opportunity to front-run the US government.

Kicking off the year with Bhutan officially launching its own government strategic reserve for BTC, BNB, and ETH, and rumors of other nations (including Russia, Brazil, Poland and Japan) now considering launching their own to compete with the US, crypto has transcended beyond a critical inflection point and become a serious asset class providing value to the world economy.

The when is now; it's simply a matter of how many governments will take action on this in 2025.

Since COVID, things have just been different.

From transformations of fundamental principles in monetary policies around the world to the impact of AI on human productivity to protectionist de-globalizations superimposing inter-jurisdictional trade friction, the economic logic that has previously been applied to business cycles has been radically disjointed. Data no longer produces the same predictable outcomes; society is beginning to ascribe value in unorthodox manners.

It is more likely than not that interest rates will remain higher than they were in the last 10/15 years, coupled with the realization that workforce distributions in emerging economies will exert pressures that are going to be radically misinterpreted; the crypto markets will experience an even greater level manipulation that it has ever before.

Barting charts, false signals, postponed announcements, and despicable levels of FUD without price impact are to be expected.

Yield curve un-inversion, macro wave five completion (as measured from 2009), power shifts, and the slew of previously mentioned macro factors are indicating that this will be the year to begin exiting.

How and when this happens is anybody’s guess. However, the infinite wisdom of cycles past should constantly keep people on their toes:

“Nobody ever lost money taking a profit”.

There are so many promising breakthroughs in so many niches/segments that to try and speculate on them all into a single thesis would create overwhelm. However, not paying any attention to them could absolve one of different insights into the evolution of the market. So here are five more interesting areas that deserve some consideration moving into 2025:

A lot of progress has been made with fHE & other ZK technologies, yet privacy as a narrative has not received much attention.

Soverngty die-hards uphold this as a fundamental human right.

Corporations and governments combat it under the guise of AML and KYC violations to protect citizens from terrorists, all the meanwhile abusing individual rights and overreaching into people's personal lives. To be “fair” here, some degree of “modular” privacy is being worked on by the likes of USDc to obfuscate the amount of information that hits the public ledger; although, the USDc contract deployers would still be able to harvest this data and in combination with ISP’s locating capabilities render that privacy irrelevant.

2025 could be the moment in time that once again sparks the desire for anonymity/pseudonymity and brings privacy into the limelight.

This one is also a very late signal to exit the markets as likely large sophisticated entities pump privacy for their own needs to clear out funds.

The term “Real World Assets” is somewhat of an oxymoron as it quite literally means the digitization of traditional instruments of value in the form of tokens.

Nevertheless, RWAs are enormous as a sector—so large that they would eclipse the entire value of the crypto industry by about 10–100x.

Surely, this is a slow-growing segment, but after bold statements by the likes of Black Rock’s Larry Fink, where he said the future of all finance is tokenized, it is anyone's guess when exactly but when it does, RWA will go straight verticle.

Also worth mentioning that this is the only sector of crypto with the capacity to flourish in bear markets!

Ending 2024 to the tune of MiCA regulations denouncing dollar-denominated stablecoins in an effort to bolster Euro-based ones and the incessant fudding of Tether, there has never been a more bullish moment for stablecoins as a whole.

From USDt, USDc, DAI and especially Ethena’s USDe; growth in stablecoins will happen unilaterally. Demand for them will arise from the demand for leverage as well as the demand by larger players for exiting their positions.

Being among the best-performing sectors of 2024, Decentralized Physical Infrastructure is a wildcard.

The nature of DePIN positions it as an aggregative category that overlaps a multitude of other sectors, including storage, VPN, and AI, all of which have further implications for tapping alternative applications such as data mapping and IOT, which contribute to the creation of more novel alternative user experiences/applications.

DePIN has a very high beta relationship to all of the other sectors it crosses, thus giving it a high likelihood of continuing to rise faster than the market index.

No prediction would be complete without an acknowledgment of what could go wrong… So, just to shake things up a bit and keep us grounded, let’s not forget that all cycles have a beginning, and all cycles have an end.

Some of the bearish overhangs and headwinds can help identify the cracks before they even show. First and foremost is the relative familiarity with crypto that broader society already has. The social saturation through mainstream media outlets and the rampant idiocracy of TikTok can accelerate the end. Next in line is the extraction of liquidity from the industry via vaporware and scams. Even though social media indicates the satisfaction of the population with Trump in office, ignoring the potential for a recession in the US would be blatantly irresponsible. The fact that many tech giants are stockpiling cash and industry giants like Jeff Bezos have already sold of sizeable portions of their equities should make one question things more deeply. Yield un-inversion is a real thing, a signal that pre-empts economic turbulence by 6–18 months; if they say, “This time it's different,” it might be worth double-checking who they are and what their incentives are.

The long and short of it is if you really want to make the most of 2025 financially and transform the state of financial life through crypto, it is quintessential not to get lost in the sauce.

Knowing when exactly something will happen is having the power of god (or, in the case of politicians, controlling facets of society they have no right to). Nevertheless, sitting on the sidelines while the future unfolds makes a man no greater.

You may no longer be early,
But you are not late.

The Best way to predict the future,
is to build it.

If they call you lucky;
Just smile at them and say yes you are.

See you on the other side anon. 🥂

Intelligence is a broad, relative, highly subjective variable that humans have yet to adequately quantify. Generally, if an organism is “alive” and “autonomous,” we classify it as intelligent life.

Nowhere else does this abstract opaqueness materialize so vividly as in Crypto.

From degens crafting dissertations on the cult value of Fartcoin to governments exploring Strategic Bitcoin Reserves to scholars developing overengineered vaporware, the Crypto industry is one gigantic magical pandora’s box of paradoxes.

In this hypomanic world, winners are few, and losers are plenty. What sets these two classes apart is the single, simple metric of intelligence as gauged by portfolio performance.

If you want to win at the game of crypto you must be anything but average. Either a Sith lord with 200 IQ or an absolute degenerate ape with 20; anything in the middle, and you are toast.

The greatest insult one can achieve in crypto is being called average intelligence. (Not to mention the emotional and financial pain associated with it).

Based on the principles of the “Bell Curve,” the Crypto Curve is a meme used to depict the distribution of intelligence among market participants.

Minorities on the outskirts (winners).
Majority in the middle (losers).

Thus is the vicious, competitive, zero-sum nature of financial games.

Coming in on the left side with a single brain cell and little-to-no self-awareness, we have the 20 IQ apes.

On the right side, with an almost supernatural level of mathematic and socio-psychological understanding, we have the 200 IQ gigabrains.

And standing smack in the middle, we have the hardworking and emotionally dependent average Joe.

Let's break these down a little further:

Thinking like a single-celled organism.

This audacious bunch is not afraid of taking risks; they are out there on the front lines of the trenches, experimenting, failing, and learning without the loss of motivation.

Highly eccentric and, at times, autistic, these gorgeous creatures are supportive of one another and skilled at the art of meme-craft.

While their ferocious commitment makes it difficult to draw the line between degeneracy and gambling, that same energy carries them over into the elite group of Diamond hands and first adopters.

Generally non-emotional, Left Curvers have a natural inclination to understand human psychology by virtue of divine intervention.

Asset types: predominantly Memecoins, but open to all categories
Examples: GOAT, SHIB, SOL, PEPE
Philosophy: Less is More, Catcoin Gud coin, HODL, WAGMI
Return delta: -99% ← → + 10,000%
Takes Profit?: Sometimes

The herd of exit liquidity.

Heavily reliant on technical analysis/charting tools, mid-curvers are meticulous thinkers who think they are diligent by obsessing over false narratives and abstaining from experimentation.

Scared to be the first, but always think they won't be last. This emotionally sensitive group of top buyers & bottom sellers go by many names: Late rotators, retail, Paper hands, Bag Holders, and everything in between.

There is not much else to say about these guys other than how important they are to the industry. Without them, there would be no profits.

Asset types: predominantly scams and slow growers
Examples: EOS, BTC, HEX
Philosophy: Buy High-Sell Low, Panic, Blame Manipulative Markets
Return delta: -99% ← → + 100%
Takes Profit?: Lol

The Alpha and the Omega.

Frontrunners and even creators of narratives, these people predict and control trends.

Admittance into this group requires specialized knowledge of cryptography, economics, finance, sociology, psychology, computer science, statistics, and other intellectually dense subject matters.

Hypercognizant of their emotional state, right-curvers are obsessive about human psychology and extraordinarily patient. These people do not bend the knee when it comes to social pressures. Not afraid of taking a loss or admitting their mistakes, this open-minded sector of people are flexible.

Asset types: predominantly Memecoins, but open to all categories
Examples: SOL, GOAT, PEPE, OM
Philosophy: HODL, BUIDL, DCA, No Leverage
Return delta: -99% ← → + 10,000%
Takes Profit?: Yes, Just the right amount

To understand what IQ generally looks like in the real world, let's rile up nationalism and stir some emotions by taking a take a peek at some data;

*Data sets vary depending on their sources; thus below, I present a compressed micro-list with the most consistent/persistent information across multiple sources that search engines can find:

The Average IQ worldwide is ~94 (range from 70–110)
Average IQ in America is ~97 (varying from state to state 95–103)
Average IQ in China is ~ 104 (106 in Hong Kong)
Average IQ in Russia is ~96 (Top 4 of countries with sub $10k earnings)
Average IQ in India is ~77 (could be cultural & due to huge population)

Please take this data with a grain of salt; it is almost guaranteed that the census method used to collect and aggregate this information is somehow skewed/biased. If you are triggered by this data, congratulations, you are likely somewhere in the middle.

Don't be offended, be aware.

Far left or far right? (Political Pun not intended)

Pick your preference.

Human nature, in the form of pride, will have many assume that they belong on the right side. Some will humbly not care (left curvers); but the simple fact is that the vast majority of people will end up in the middle.

Regardless of which side you pick remember that being average is the only wrong answer and that:

“He who chases two rabbits,
Catches Neither”

While the type of asset is certainly a strong indicator, understanding how to quantify where on the spectrum somebody lands is a mixture of factors ranging from their emotional and psychological well-being during the decision-making process, the logical reasoning (or absence of it), aptitude to handle social feedback, and of course the final outcome of the decision.

Ultimately, just get objective. Be real with yourself. Understand your risk preference and take action.

Go out on a Limb,
That is where the Fruit grows.

Peace, Love, & Absolute Abundance to all (regardless of where on the Curve you land)

See you on chain 🥂

Like clockwork, 36 months after a debilitating bear market, we shake off the psycho-social anxieties of -90% drawdowns and blast out into all-time highs. 

Coupled and amplified by the highly favorable outcome of the US presidential elections, the cyclicality of the crypto markets has shown its hand once again.

Unless you are a seasoned expert like GCR; during these boom times, reality becomes blurred as our blood pressure runs high alongside the floods of FOMO-inducing PnL screenshots and serious sums of money hanging on the line. Man regresses into his most primitive on the fervent instinct to accumulate wealth. The dualities of his intentions shall rise to surface his true character. 

Up and to the right.
  “ But Sir; physics says its not possible.”
  “ Who is “Physics” and why are you listening to him?”
Up only I said.

Prices are rising,
Cults are forming,
New narratives are capturing attention.

And retail is only starting to arrive now.

Things are about to get wild. 
Very wild.

WAGMI, they say. 
Supercycle, they say.
This time, it's different, they say. 

As we accelerate upwards through explosive/chaotic market expansions that allow us to enjoy the onset of fresh liquidity driven by FOMO, we shall bear witness to the intellectual atrophy of the industry’s subject matter(s). The quality, depth, and honesty of content will recede as soulless conversations about price take front and center.

Gamified, “funny”, socially cognizant, and absent of liability, this cycle's domineering theme of Memecoins is an apocryphal example of the double-edged dualities and paradoxes of web3.

While these wonderful, retail-oriented instruments have done (and continue to do) amazing things for the industry, such as:
- blessing us with glorious double, triple, and even quadruple-digit returns 
- bringing soul back into the industry by acting as a counterbalance to the ETF/tradfi crowds
- embodying the purest realizations of crypto/blockchain’s innate power (borderlessness, permissionlessness, censorship resistance, opposition against “Goliath”)

They simultaneously bring with them a behavioral virus… 

Belligerent greed driving manic levels of grifting. 
Vaporware heralded as a new paradigm.
New millionaires popping up daily.

The delicate social thread of attention upon which the memecoin market hinges forces market participants to resort to extreme measures. Provocative marketing, eclectic branding, and traumatizing market-making; whatever it takes to trigger intense emotional responses that capture that very scarce and erratic resource of attention. This is a very steep, slippery slope leading to moral and psychological deterioration, especially when factoring in that prolonged exposure to the sector’s toxic, demoralizing culture of degeneracy and low IQs skews perspectives and incentivizes malicious behavior (scamming).

Regardless, when measuring industry growth over time, not just “Top-to-Top” but also “Bottom-to-Bottom,” Memecoins are a huge positive for the industry. 

Possibly as a result of the “knock-on” effect, where simply due to the egregious amount of volume, some degree of liquidity permanently spills over into adjacent areas such as infrastructure and DEFI where it will increase the baseline, or into the portfolios of diamond handed veterans, which will reliably continue to steer the development of this industry.

When prices are flying and emotions are high, our job is to enjoy the ride as much as possible while always remaining grounded. 

The best way to do that is by taking a moment to look at the big picture. 

To remember the deeply philosophical foundations upon which this industry was born and upon which it continues to blossom… The existential distrust in government and elegance of the human psyche.

Nothing is personal. 
Nature does not discriminate or play favorites.

It explicitly indicates that intelligence will always optimize for energy efficiency, and over time, all resources will flow there where they require the least effort and produce the most effect. 

In the case of human attention and capital resources, this environment is a decentralized one.

The diffusion of control/authority over a system from a single source to many. 

Promising to radically transform the economic fabric of society through the synthesis of cryptographic, economic, and social primitives, Blockchain technology (namely Bitcoin) captured the imaginations of a very small, special circle of people known as cypherpunks back in 2009–11. 

Witnessing the exponential technological developments in computer science while living through the dotCom and GFC bubbles, these people were united and incentivized by their belief in technology as a natural extension of human rights and self-sovereignty.  

Hard-coded and isolated from politics, Bitcoin was the perfect instrument to transform power structures, circumvent government oppression, and rehypothecate value.

An alternative monetary regime,
Governed by all,
Owned by none. 

To stand against Big Brother.

First, it was an idea that was dismissed.
Then, a working product that was laughed off as a toy. 
Then, a threat to governments that was harped on and revolted against.
Today, it is the cornerstone around which modern finance is coordinating.

By lowering the barrier to entry, abstaining from the enforcement of arbitrary social laws, and detaching from the confines of geographic borders, we equalize opportunity and open up the playing field.

Economics are massive social emperiments, always have been, always will be. 

The premier application of Blockchain technology, cryptocurrency, is a tokenized unit of account, medium of exchange, and store of value. Digitally native money that is cryptographically secured.

We won't go too deep here, but money is an abstract concept that acts as a vehicle to simplify and facilitate the measurement and exchange of value between people. You acquire it by exchanging your most scarce and precious resources, time, energy, and knowledge for the resolution of people's problems/creation of solutions rather than on yourself. For your contributions, society rewards you with resources that allow you to experience something else. It is stored energy that signifies acquisition through the expansion of effort over time in the pursuit of a desirable outcome.

Crypto’s esoteric money-like nature pushed humanity into challenging the status quo and reconsidering what value truly is and how it is ascribed.

After public disillusionment from the surfacing of truths around conspiracy theories, governmental corruption schemes, and blatant economic manipulation collided with the arrival of blockchain technology, a revolution began.

Individuals gathered to build digital communities comparable in size and influence to nation-states to declare economic emancipation by naming decentralized crypto networks’ computational resources (coins) to be valid, alternative, independent forms of value.

Fast forward 10 years, and in addition to the radical new class of wealthy people rising around the world, cryptocurrency birthed an entirely new sector based on an alternative monetary system. 

The impact of crypto’s innate technical primitives of sovereignty, borderlessness, accountability, interoperability, and divisibility naturally apply to and extend the utility of money. By decreasing transactional friction while increasing security, cryptocurrency unlocked the concept of superfluid finance.

Nearly, if not all, applications and institutions have either already integrated or have shown intent to integrate crypto/blockchain into their operations. From payment megacorps such as Cashapp, PayPal, Transferwise, and Moneygram reducing costs and settlement times with stablecoins; to wealth managers like BlackRock catering ETFs to their legacy clients, to enterprises like MicroStrategy building reserves on their balance sheet; the list of experimentation is limitless.

Crypto has seeped so deep into society that we no longer bat an eye at the fact that ETFs hold over 5.8% of Bitcoin's total supply or that government ownership is over 2.5%. Over the last 3+ years, El Salvador incessantly added 1 $BTC to its reserves every single day. Today, with ~5,750 BTC (~0.027% total), it ranks as the 6th largest country to hold $BTC. It could be coincidental, but governments, including Dubai, Singapore, Russia, Brazil, Sudi, and others, have been pushing crypto-friendly policies and, in turn, drawing in capital, residency, tourism, or otherwise flourishing. 

Stablecoins hold over $120 Billion or >2.5% of US Government Treasuries. Tether (USDt) is the 16th largest holder of US government debt in the world, accounting for over $105 Billion. Circle (USDc) is sitting at $31 Billion worth of USTs/REPOs. MakerDAO (DAI) holds over $1.2B. 

It's crazy when we realize that these numbers will continue to go up.

It's almost poetic, that the technology they so vehemently fought against turned out to be exactly the remedy they needed most. From polar oppositions wanting to tear each other down to a mutually beneficial partnership building each other up.

Rarely discussed anymore, but well-known is the super-symmetric alignment of crypto as a technology with the fundamental forces governing human life. 

Designs of economic systems are logically rooted in the physical laws of thermodynamics. Energy cannot be created; it can only be transferred — crypto does not randomly create money; it simply packages it. Over time, entropy pushes atomic life to chaos —  the more decentralized something becomes, the more challenging/messy the coordination. Finally, how temperature overlaps with social interest is mindboggling; markets get “hot” when new people/capital resources enter and “cold” when interest leaves; flux is necessary for a harmonious existence.

The philosophic rabbit hole runs insanely deep. 

Rather than having me rehash the biblical volumes of cosmic implications that cryptocurrency has on the fabric of society, the most effective way to stumble upon that profound existential coincidence is to DYOR.

Trust, But Veryify. 

Underneath the hood of this economic revolution, the actual technology powering cryptocurrency, blockchain, is not all that sexy. It is an intellectually dense technology rooted in the subject matters of cryptography, distributed computation, game theory, mathematics, and so much more. 

Blockchains are data clouds that store and process information in a structured way according to criteria involving sequencing, speed, reliability, security, finality, etc.

Through an intricate weaving of asymmetric-key cryptography, byzantine fault tolerance, hashing, zero-knowledge proofs, message-passing protocols, and a suite of other computational innovations, blockchains provide a systematic framework that transformed data structures from CRUD to CRU. 

By removing the ability to delete information, history became immutable. It was now possible to track and record the state of and progression of information.

Coupling this with its open, distributed nature, we arrive at the big tangible breakthrough that blockchain technology has on society: a tamperproof digital ledger that records data in an autonomous, transparent, and reliable way — the birthplace of triple-entry accounting. 

Reduce/Remove Error.
Maximize Accuracy.
Streamline Processes.

Literally, it is the perfect mixture of traits for a digital fabric of trust. No wonder it is colloquially referred to as the “engine of trust.”

Its application is only limited to imagination.

 * Proving provenance in physical supply chains. 
Increasing certainty of an object's authenticity by tracing its originating source while reducing/removing counterfeits has done wonders for collector markets such as wine, art, shoes, watches, trading cards, and luxury goods.

 * Proving provenance for informational supply chains. 
The IOT (Internet-Of-Things) industry is very fragile and vulnerable to manipulation around the edges. Sensors must stream information about their environmental state, and there are a multitude of natural variables that can corrupt this stream. Making sure that there is a consistent, honest set of information building this state requires the “consensus-related” functions of a blockchain to detect and deter malfunctions.

 * Time Stamping.
The block height of a chain can be used as an alternative measure of the progression of time. By adding an extra layer of validation, in the form of a a blockchain’s block number, we can track series, such as the processes of signing documentation, releasing a newspaper, recording a video, etc.

 * Social Media Networks.
Incentivized, bot-free, censorship-resistant, unhackable environments that preserve user privacy, rehypothecate de-platforming risks, grant users ownership through utilization and engage in governance. Potential order of magnitude improvement and the powerful wealth effect of transposing the value of the Social Media industry from a single centralized corporation to its million/billion user base.

 * Digital Identities.
Portable, platform-independent, proofs-of-humanity. An esoteric concept, identity was, is, and will be one of the most important applications of blockchain. Being able to freely travel across borders and not fear citizenship revocation. 

 * Managing Autonomous Agents. 
This element is two-fold. Internally, blockchains can be integrated into the operating systems of the AI themselves, to ensure that these agents are kept maximally aligned with protocol and unable to game the system. Externally, assuming crypto really is the defacto digital financial instrument for a hybrid human/AI economy, then blockchains would protect the systems with which they interact. AI will always find the most optimal paths, and those will always be the ones void of artificial barricades. 

Crypto and blockchain have secured their roles across a multitude of industries {pharma tracking, timestamping, finance, science research, et al.} and became permanent/irreplaceable elements that will persist alongside the advancement of all technologies moving forward. 

Out of Sight, Out of Mind.

Society exists in a wave-like flux of trends.
Something is generally only considered important if it is loud, grandiose, and/or in your face.

Semiconductors are a component of literally every single electronic device. Tiny, microscopic things we don't even think about, but without which, we would not have the technology that we do, nor its associated blossoming $680 Billion dollar industry. 

While we may occasionally take antibiotics, we rarely consciously process the value that this innovation has brought to society. Since the discovery of penicillin, the average human lifespan extended by 20 years because previously lethal bacteria could now be dealt with. Talk about impact.

In the rapidly evolving world of technology, there is a select range of technologies that dominate the conscious due to them, in some way, shape, or form, applying to/measurably touching every industry and facet of human life. 

Quantum Computing, AI, Blockchain, Cryptography, Robotics, 3D printing, VR/AR, IoT, Laser Surgery, Renewable Energy, Nanobots, and a few others.

Most of these technologies and their correlating science(s) are actually pretty sexy. They carry a visceral, innate association in our minds composed of sci-fi fantasies and well-spun narratives from theoreticians.

Blockchains and cryptography… not so much.

Perhaps the mother of all tech trends, the be-all-end-all point of computer science, singularity, whatever you want to call it, is AI. Going through rigorous cycles of hyperbolic exuberance flares and prolonged, ice-cold winters since its inception in the early 1950s, AI has experienced exponential improvements while public ideologies remained largely the same. Skynet. Matrix. Terminator. 

Even though I undoubtedly believe that in a future where man and machine synthesize and share autonomy, I personally do not believe that the current iteration of “AI” is anywhere near the stage people assume/speculate that it is in. Powerful narratives and well-executed coordination among sophisticated entities have blasted this subject into the stratosphere of public consciousness and drawn attention from everything else. ***Disclaimer: it is possible I am midcurving this one.

Every institution, sovereign, nation-state, enterprise, VC, startup, and software tool is howling at the moon in attempts to get an edge over the other guy to show the world how innovative/special they are. So prevalent is the AI narrative that it has bled into all adjacent technologies, boosting them individually and further diverting attention from them.

No need to look far. When discounting memecoins, AI is actually the hottest sector of Crypto with the greatest growth and returns this cycle. There are even AI memecoins that are printing quadruple-digit gains and forming new cults daily.

However, when times get tough or the “next best thing” hits the markets, our industry loses its appeal. If prices are not going up, then it's not worth the mindshare. Unwinds of over 90% during bear markets are standard.

It’s as if the power to be economically independent from governments suddenly provides less value.

If retention was higher and users/use cases were stickier, would these unwinds potentially lose some of the severity, and cycle times would compress? Is any one technology more important than the other? Is this sustainable? Maybe. Maybe not. This is left to greater forces. For society to judge and time to prove.

The human experience is transient; what is here today was not here 500 years ago, and will likely not be here in the next 500.

The Best way to predict future, is to create it.

Human life is like a star looping, drawing circles; time is a 4th-dimensional force that propels the loop into a vacuum. Thus, the human experience is reminiscent of spirals, both on the individual and group levels. Whenever loops have points of overlap, people tend to say that “life may not always repeat itself, but it sure does often rhyme.”

Sometimes, in the daily hustle and bustle of human life, we get absorbed in our own microcosms and forget about the infinite wisdom of the external world tucked into the crevices of history. 

We forget that seasons change.
That trends will come and go. 
That crypto will continue to grow. 

Regardless of what inflation in the US might be or what the spot price of Solana is, the sun will shine, the grass will grow, and every 600 seconds, a new block will be appended to the Bitcoin blockchain.

But honestly,
when your up 3,141% on a shitcoin, all this zen stuff doesn’t fu*king matter.

When I got into crypto, it was the time of underground, anti-establishment revolution; when the content was scarce, subject matter experts were basically non-existent, and conversations around privacy as a fundamental human right and code as a form of free speech (to protect it with the First Amendment) dominated the chatrooms.

Yes, of course, money was important, but it was only an instrument to measure how effective this revolution was, a natural byproduct of its truth. I was purely “In it for the tech.”

Or so I told myself.

After multiple cycles of absolute financial obliteration and self-reflection, it was obvious that the Narrative hooked me, and the price action kept me.

A rising tide lifts all ships, and Everybody is a genius in a bull market.

As you experience an influx of great wealth, it's easy to detach from reality.

Always keep in mind the humbling reality of nature's cyclicality.

“ Hard Times create Strong Men,
Strong Men create Good Times
Good Times create Weak Men
Weak men create Hard Times ”

Where will you be in 2 years?

Live Long 💎
& Prosper Anon

I'll see you on-chain🥂

- Industry is still tiny relative to its potential impact on the world economy
- Too early to assume that winner has been chosen
- L1s can produce sustained, long-term performance

Just like nations have their own unique laws/regimes/currencies by which their economies work and citizens abide, Layer 1 blockchains are sovereign digital ecosystems with their own hard-coded consensus rules, validator sets, and units of value for transactions.

From the interoperability of layer 0’s,
to the economic security of 1’s, 
to the scalability of layer 2’s, 
and even obnoxious fluff of layer 3’s and 4’s. 

The crypto industry is full of layers.

Even though the variety and value proposition of a multi-layer crypto architecture hold the potential promise of solving some fundamental UX and operational hurdles, there is one layer that tends to attract the most controversy. 

Layer 1.

The general sentiment/attitude of natives within the crypto industry about new layer 1’s is predominantly negative. 

Most of the digital populace has defaulted into thinking that Ethereum/EVM or Solana/SVM will be the final version of a smart contract environment and that competing with them is futile/unnecessary.

This is understandable, given that the crypto industry as we have it today exists in great part due to these layer 1s, and it would be haram to fight against an OG. Besides, wouldn’t any sane person also defend and promote their bags?

In the early 1980s' IBM owned 80% of the computer market and made up roughly 6.4% of the S&P 500. If we fast-forward to today, we see IBM's computer division being sold off and companies like Microsoft and Apple orders of magnitude ahead.

In 2009, BlackBerry owned 56% of the cell phone market. Fast forward to the invention and adoption of the iPhone, and we see Apple absolutely annihilating Blackberry. 

The network effects and first-mover advantages of Ethereum (ETH) and Solana (SOL) are substantive. Over 80% of all on-chain liquidity is locked between the two virtual machines, (EVM hosting over ~71% and the SVM around ~8.45%). Regardless of their lead, as history shows us, nothing is final. Nothing is certain—only change.

Even if Ethereum owns the majority of current developer mindshare and hosts most of the industry's liquidity inside of its EVM, the relative size of the crypto industry & the depth to which it has integrated itself with society is negligible at best. 

Sitting at a market capitalization of 2.5 trillion USD (most of which is illiquid), the entire crypto industry is worth less than the equities of ~5,509 public companies listed on the NYSE & NASDAQ (which are in aggregate floating around ~72.63 trillion).

Global equities are worth ~110 trillion.
Real Estate is worth ~350 trillion.
Fiat money around ~240 trillion.
Commodities are ~170 trillion.
Apple alone is >3.2 trillion.

Crypto, as a tool and the technology it exists upon, blockchain, are/will be responsible for impacting and enhancing every other market on the planet, yet it makes up less than 0.05% of the world's wealth.

Regarding mindshare, in the most optimistic scenarios at the high end of the spectrum, only about 38,884 developers work full or part-time in the industry. 

That is nothing.

To put things into perspective, worldwide, there are:
Over 2.8 million developers working in the IOS ecosystem, and Over 5.9 million developers working in the Android ecosystem. 

Github, a single platform, hosts over 100 million developers alone.

It is inevitable that as tooling improves, more languages become available, and programs become all the more compatible, there will be more developers in crypto.

Crypto markets, like all other markets, go through trends and cycles. 

Each cycle has a multitude of narratives that shape retail trends. 

In 2013, it was Bitcoin.
In 2017, it was ICOs. 
In 2021, it was NFTs. 
This time, so far, it has predominantly been Memes.

Any culturally relevant object/ideology, be it Animals, Celebrities, Religions, Astrological signs, or just simply mental creations such as SCF (Smoking Chicken Fish) has been tokenized and captured the retail markets. Although, the 10,000%+ overnight returns have helped persuade them as well.

During these narrative flares, we lose sight of the foundations upon which this is all taking place, the foundations where all the real liquidity exists, the facilitators of these opportunities.

The last generation of Layer 1’s have done rather impressive numbers so far this cycle:

Near (NEAR)
Cycle Low: $0.99
Cycle High: $8.98 (+807.07%)
Current: $4.25 (+329.29%)

Sui (SUI)
Cycle Low: $0.38
Cycle High: $2.34 (+515.79%)
Current: $1.81 (+376.31%)

Sei (SEI)
Cycle Low: $0.10
Cycle High: $0.95 (+850%)
Current: $0.38 (+280%)

If we turn back further to look at the return generated from multi-cycle layer 1’s, these numbers grow exponentially:

Binance (BNB)
2020 Lows: $12
Cycle High: $605 (+4,941.66%)
Current: $585 (+4,775%)

Avalanche (AVAX)
2020 Lows: $2.79
Cycle High: $60 (+2,050.53%)
Current: $25.5 (+813.97%)

Solana (SOL)
2020 Lows: $0.60
Cycle High: $203(+33,733.33%)
Current: $172 (+28,566.66%)

With the thousands of crypto assets, multitudes of layers, and opaque definitions, understanding the actual size of the crypto economy is difficult (let alone how to identify them properly).

The layer 1 landscape is comprised of two blockchain types; smart contract platforms and value networks. Both are ideologically rooted in security, transparency, and decentralization, but smart contract platforms are turning complete POS environments that enable complex computation on-chain, whereas value networks are predominantly based on POW/mining and do not provide functionality outside of transferring cryptocurrencies. 

Examples of Smart Contract Platforms:
Ethereum (ETH), Solana (SOL), SUI (SUI), Aptos (APT), Cardano (ADA), TON (TON), SEI (SEI), Algorand (ALGO), Ripple (XRP), Polkadot (DOT), Cosmos (ATOM), Tron (TRX), Waves (WAVES), NEAR (NEAR), etc.

Examples of Value Networks:
Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE), Decred (DCR), Monero (XMR), Zcash (ZEC), Ravencoin (RVN), Digibyte (DGB), Groestlcoin (GRS), etc.

 * there are some hybrids, such as Kaspa(KAS), that unify smart contract development with Proof-of-Work mining as the security modality.

There is one genuinely strong argument against the propagation of new chains.

Isolation or the fragmentation and loss of composability.

The argument is rooted in the concept that having more layer 1s would ultimately lead to a similar undesirable, suboptimal network architecture similar to what we have in the World Wide Web today. This is not true. Besides the constant advancement and expansion of interoperability solutions, many technological designs now allow chains to become language and VM-agnostic.

The opportunities of these new chains far outweigh opposing forces.

Industries can grow in two ways: vertically and/or horizontally. Vertical growth is the appreciation of existing asset prices. Horizontal growth is the expansion/introduction of new assets. Layer 1 will ultimately serve the industry by expanding it horizontally. 

New Layer 1’s allow a new audience/group of sophisticated operators to have an early, meaningful stake in infrastructure. 

New Layer 1’s will be able to deliver superior technological solutions due to the natural agility/flexibility afforded to younger projects and the ability to experiment faster with a broader range of tools (which are constantly being developed).

Ultimately, optionality, the ability to freely opt out of and into sovereign economic systems, will be a lynchpin factor in the final overall design of the crypto/blockchain sector that will eventually be integrated into society.

Is the future really going to be on-chain? Will it be Multi-chain? What chains are going to rule in the future? Are we destined to repeat the past?

Great questions!.. I don't know.

But, what I do know is that in 10 years, this industry will be orders of magnitude larger by every possible measure than it is today. 

The builders are building;
fiat is crumbling; 
users are coming.

Rather than sitting passively on the sidelines, it has always been best practice to build, experiment, and push the limits of what's possible. 

This has all been warmup. 
The real party is just begging.

See you on-chain Anon.

“Nothing is good or bad
But our thinking makes it so”

- William Shakespeare

Partially due to the nascency of the technology unlocking a new financial paradigm and partially due to the lopsided reasoning of die-hard extremists, crypto is full of controversial, polarizing views.

Influencers shilling their bags, promising innovation.

Maxis calling everything shitcoins, swearing that BTC is salvation.

Anon’s posting screenshots of mind-melting gains, talking about portfolio optimization.

Michael Saylor calmly riding the storm, while Headlines are flashing red.

In this industry, deciphering between fact and fiction is a form of art.

In order to masterfully navigate the space, one must be able to think for oneself, and to do that, one must be able to hold conflicting thoughts and find the truth in both of them.

Here we are going to do just that.

We shall address some of the most controversial topics floating around the crypto-verse and make arguments from both sides.

Let's begin:

Centralized Exchanges

Demonized by crypto Puritans, CEX’s have been the focal point of retail volume for the entirety of crypto history. These venues have brought tremendous wealth into the ecosystem (in terms of users and capital) and simultaneously caused catastrophic failures. From the debacle of MT Gox in 2014 to the recent FTX collapse in 2022, centralized exchanges have become a heated subject that has invited increased competition from their decentralized counterparts (DEXs).

Supporting: CEX is Good
Centralized exchanges are critically important for the industry because they play the role of an interface for retail. CEXs abstract away a lot of complexity relating to key management, reduce fees by keeping trading off-chain, and ultimately facilitate the bulk of exchange volume. They provide a (granted mediocre, but still some) degree of protection to their users from themselves (by keeping funds in a CEX users are able to avoid having their wallets drained or interacting with malicious links.)

Centralized exchanges act as interim bridges between the crypto economy and legacy finance. Well-organized, compliant entities such as Coinbase and Kraken become legal onramps that help formulate regulatory clarity.

Opposing: CEX is Bad
A wolf in sheep's clothing. Centralized exchanges are the antithesis of cryptocurrency. They hold your private keys and subject you to their whims.

As history has shown us, regardless of regulation, centralized exchanges will engage in shady activity and will not hesitate to misappropriate user funds, freeze balances, and confabulate arbitrary reasons to ruin the user experience.

Verdict:
There will be good actors and there will be bad actors everywhere you go. Not intended to act as a wallet/vault for storing crypto but rather an intermediate point exclusively for ease of trading; a CEX is just another tool; it is up to the user to figure out how to use it.

Regulatory Oversight

What many call the “final boss” to crypto mass adoption, regulatory oversight is arguably among the most sensitive subject matters in crypto. While, in theory, the intentions of regulatory oversight make sense, there are nuances and political agendas that twist and abuse the law in not-so-subtle ways, distorting reality and blatantly lying to consumers.

Supporting: Pro — Regulation
Necessary to formalize the industry and provide added guardrails to protect citizens. Having concrete incentives and operational standards in place would deter malicious actors and create an environment considered more trustworthy by the average person.

The sooner that regulation arrives, the sooner the industry gets acknowledged by legacy finance, and the sooner the floodgates open for old money to pour in.

Opposing: Anti—regulation
Façade. Regulation is like sushi with chocolate milk, only good in theory.

Giving regulators control of the industry breaks the core tenets of decentralization, not to mention destroying the vision of a sovereign economic future.

The people in charge will do everything they can to mask their true intentions of helping their friends. They will step over any moral boundaries and create parasitic laws, tucked away in plain sight so that the layman will not understand how to interpret it, and stifle innovation.

Moreover, once regulation takes hold of the industry, we will lose that freedom of the Wild West feeling. We will forfeit much of the radical, bleeding-edge experimentation as we attempt to make our overlord happy. The revolutionary cypherpunk spirit has been replaced with the cold whispers of ETF across the marble walls of Wall Street.

Verdict:
A necessary evil. For the most part, both sides of the argument have the same end goal in mind: understanding how to operate in the space.

Regulators might not be able to impose regulations at the network level, but they definitely can make getting in and out of crypto a nightmare.

Token Unlocks

An unavoidable element in the creation of a crypto network, token unlocks are recurring, economically intense events. As the industry continues to blossom, more tokens will launch, and more unlocks will take place. Understanding how to think about them can guide you in the decision-making process.

Bullish
Unlocking tokens means increasing the circulating supply. Having as much of the supply out in the market as possible provides more natural, higher-quality price discovery.

Just because more tokens are coming onto the market does not directly translate to those tokens being sold. In fact, it could mean the exact opposite; perhaps there are buyers on the market looking to put on some size and, without an unlock, would be forced to pay higher prices (or accumulate less).

Bearish
Human nature coupled with astute financial management would incline any rational human being to realize their profits/recoup their investments as soon as possible.

Every influx of tokens into circulation also means an influx of value in terms of market capitalization. Market forces will typically balance around capitalization, if an unlock of 10% boosts the FDV too high, odds are stakeholders will offload their positions to restabilize market cap.

Neutral
Not every unlock will be significant. Odds are that the vast majority of unlocks will have little to no market impact because they will be priced in ahead of time. Unlock schedules are usually made public, and the markets tend to front-run the event.

Self Custody

Possibly one of the most talked about subjects since the arrival of crypto itself, the conversation around custody boils down to the well-known saying, “Not Your Keys, Not Your Coins.”

Supporting: Self Custody is Good
Maintaining full control over one’s assets is the killer value proposition of crypto. The simple fact that crypto is the only asset class that allows for digital ownership and sovereignty warrants users taking the extra step to remain in control. By opting to self-custody, we reduce (if not entirely remove) third-party risk vectors. Holding the assets should imbue the user with a sense of economic freedom and allow them to have ease of movement (no obligation to tie wealth to a jurisdiction).

Opposing: Self Custody is Bad
Custody is hard and introduces risks associated with natural human error. Being fully responsible means always having to remain vigilant or end up falling victim to scams.

Managing keys, mnemonics phrases, keystore files, storing them safely, and using them safely, deteriorate the user experience. There are countless stories of users losing their private keys, forgetting where they were written down, or having their crypto stolen due to a security lapse consciousness.

Being fully responsible is dangerous; better to hand it off to professionals who have legal obligations to protect users.

Verdict:
Self-custody is supreme, but so is human nature.

The only balanced approach is a combination of both.

Hybrid custody has, in fact, been considered a supreme model for years; through a simple multi-sigs implementation, users can give a degree of custody to trusted third parties to help them with key recovery.

Strongly suggested and supported but not enforced, the simple fact that self-custody is at all possible must be protected, just like the freedom of speech or religious expression: self-custody must remain an inalienable right.

Memecoins

Falling squarely on the left curve of the crypto intelligence spectrum, Meme coins are a cultural phenomenon expressed as a digital unit of account.

WIF, BONK, PEPE, WEN, DOGE, HarryPotterObamaSonic10Inu, and the smorgasbord of other exotic, strange names representing a nascent category of assets that have come into existence exclusively due to blockchain technology.

Supporting: Memecoin Good
Unlocking a new financial paradigm rooted in culture, memecoins invite a caliber of users that would otherwise not be involved, thus being a net positive to the industry in terms of capital and users.

Playing the role of a psychological focal point for driving collective behavior online; memes lower the barrier to entry for average people by making the asset less about complex financial metrics and more about subtle social primitives such as “relatability”.

Moreover, the strength of communities that form around memes can be comparable to that of legacy financial institutions; It is very likely that a $DOGE token holder will own their coins longer than they will have dollars sitting in their bank accounts.

But the fun does not stop there. Whenever built on top of other blockchains, memecoins bolster the network with activity and liquidity, becoming catalysts that drive second, and third-degree orders of impact on layer 1 coin prices.

Lacking formality is a feature, not a bug.

Supporting: Memecoin Bad
Scams designed to psychologically dup unsophisticated retail users into throwing money down a drain.

Memecoins are ultimately a net negative because the vast majority of users will lose money and be scarred from their experience so much that they abandon the industry and become vehement nay-sayers.

These “assets” are usually short-lived bursts of excitement that clog networks with spam activity. Single-cycle vaporware that ceases to matter during times of macro turbulence.

Verdict
Memes must meme.

As an industry, it is important that we retain the power to launch economic systems far outside the grasp of institutions.

Modular/Monolithic Architecture

Modularity in blockchain architecture refers to the permanence and degree of isolation of a system's code. Monolithic blockchains such as Bitcoin and Solana have tightly knotted components within the system that are critical to other components. Modular Blockchains, such as Manta Pacific and Celestia, on the other hand, are all about code flexibility.

Modular is Android, Monolithic is Apple.

Modular is Superior
Becoming the leading narrative driving the recent crypto rally, modularity naturally falls closer in alignment with the open, permissionless composability of Web3.

Having the ability to customize and swap functionality ad hoc provides a greater likelihood of success for a crypto project. As the rate of evolution in technology continues to accelerate, it will become increasingly important to integrate some of the breakthroughs into the tech stack; something only possible in the presence of a modular architecture.

Furthermore, modularity is actually a more secure structure. In the event that a single component/algorithm fails or has some critical vulnerability found, then that component can be switched out without too much disruptions to operations.

Monolithic is Superior
Monolithic blockchains provide much stronger relationships between the network’s operations and the base token. These systems tend to foster life-long commitments from their communities because the structural rigidity reflects itself in the philosophy. Maintaining ties to their original message results in a higher degree of trust from the audience.

From the operational standpoint, having a single point to allocate community resources (thought, capital, and skill) increases the system's resilience.

Verdict
Absolutely subjective. Both architectures have their benefits, both have their tradeoffs, and both are working just fine.

Modular chains are easier to build. Much of the code is open sourced and much of the innovation is publicized. Therefore, it is anticipated that there will be more modular chains than monolithic ones moving forward. The inverse logic holds up for monolithic, which are harder to build and maintain, but typically result in stronger security guarantees.

It is unlikely (if not impossible) that one will eradicate the other; the future is multi-chain, and those chains will vary in their architecture.

Volatility

Price action that can tilt fortune in your favor… or leave you on your ass. Volatility is a matter of behavioral preference; depending on who you ask (and what they do), volatility is either a blessing or a curse.

Supporting Volatility is Good
As the saying goes, no risk, no reward; and volatility is the risk factor.

A signal indicating large fundamental shifts in the social acknowledgment of an asset, high volatility is a godsend for risk-loving short-term traders. The sudden, sharp fluctuations in price act as an alluring call to supercharge one’s financial situation.

Moreover, high volatility extends beyond the spot markets into options, driving funding rates and supercharging trading strategies (such as Delta-neutral ones) with additional yield.

Opposing Volatility is Bad
Volatility is a direct expression of an immature market, and immature markets lack the characteristics necessary to attract the monsoon of legacy liquidity.

The higher the volatility, the higher the inclination of market participants to gamble (as opposed to invest) the higher the collateral damage to users. Crypto is intended to become the financial rails of the global economy, and so long as high volatility is present, that mission is unattainable.

Verdict
Volatility is the “widow-maker of the untrained trader and the destroyer of margin trading degenerates”.

Market participants with longer time preferences should not be phased by the day-to-day price actions and instead interpret the instability as confirmation of their convictions.

Meanwhile, those with less capital (or heightened time sensitivity) are heavily dependent on the volatility and (some would argue) should be doing their all to thrive in such environments.

Mining, Proof-of-Work, and the Environment

A topic that has always been prevalent in the crypto community and one that began drawing massive mainstream attention once Bitcoin’s energy consumption surpassed that of independent nation-states; proof-of-work mining is the mechanism responsible for transmutating electricity into digital gold.

Supporting: Mining is Good
Proof-of-work systems are the most pure expressions of decentralization. Binding atomic resources (electricity) to the creation of digital goods lends itself more alignment with nature, open systems that are dependant on the laws of physics rather than the arbitrary man-made laws.

POW is the only mechanism capable of resisting government shutdown as it is the only one that can lay claims to asset archetypes of commodity and truly permissionless participation.

The hardware component drives development at the physical layer of the stack; creating jobs building specialty (ASICS) machines that force innovation at the level of silicone chips and microprocessors, elements that are quintessential to the progression of mankind as a whole.

Not too dissimilar from traditional mining operations, the resources expended act as the buffer validating valuations. The more resources spent on protecting something, the more valuable it becomes (in so far as it relates to society).

Moreover, mining acts as a buffer for balancing electrical grid loads; during times of low demand, service providers can re-direct their infrastructure to mining purposes and maximize the value of their equipment. Now, rather than having to lose their excess reserves (electricity stored in batteries leaks out slowly), companies can find optimal win-win situations (the company monetizes their waste, and the network receives extra resources that strengthen security).

Opposing: Mining is Bad
The amount of waste created in the process of mining is unnecessary. So many resources are spent without any clear benefit that it is foolish not to reallocate them to better purposes such as AI and gaming.

We can optimize network operations, reduce the managerial complexity of maintaining physical infra, and save the environment from incessant carbon emission if we simply shift models away from mining.

Verdict
Mining, being an environmental issue, has been disproven. (ESG muppets can sit TF down and drink their soy milk).

Even though we can see some degree of success (and logic) with Ethereum’s transition to POS, we can also see the absolutely psychotic parabole of hash rate growth in Bitcoin.

Banning or removing POW systems would be similar to declaring war on decentralization.

Satoshi Nakamoto

The creator of Bitcoin. Godfather of the Cryptocurrency industry. Anonymous Outlaw or Coordinated Committee of Intelligent Actors, Satoshi Nakamoto is the mystery of our industry.

Supporting: Net Positive
Without Satoshi, there would be no industry worth $1.6 Trillion and growing.

Powerful perpetual narrative of an anonymous entity revolutionizing human economic endeavors. That shroud of uncertainty that distances Bitcoin from the government is an added layer of protection. By remaining unknown, the layman will have a higher degree of certainty that the government cannot/will not coerce the creator into shutting it down (possible or not).

The story’s uniqueness creates pockets of conspiracy theorists that drive extra attention.

Opposing: Net Negative
The mystery of this figure casts a perpetual shadow of uncertainty; what if he does return? What if we really do crack the code and get access to his wallet? What if it really was just the government playing games with us?

Verdict
Long live Satoshi Nakamoto.

KYC - Know Your Customer

The core policy for regulatory compliance and the only real method of sybil defense, KYC remains one of the most contentious subjects in crypto.

Supporting: KYC is Good
Conducting KYC protects not just platforms from spammy bots and violations against international counter-terrorism financing laws, but also protects users from interacting with dangerous entities.

KYC helps align a project with social morals to avoid doing business with dirty money. Moreover, Know-Your-Customer policies ensure that a platform's analytics are pure and accurate.

Opposing: KYC is Bad
Another subtle way to tith the cryptoverse to the hip of legacy finance, and the single greatest point of friction in the onboarding process, KYC must be removed.

Forced KYC results in platforms not being able to onboard as many users as possible and deters capital. Many, if not all, of the sophisticated crypto market participants, search for economic environments that help them protect their capital and circumvent taxes; doing KYC defeats this purpose and, in turn, pushes users to alternatives.

Verdict
While the fundamental necessity for KYC is genuinely understandable, its shadow implications of having sensitive identity information in the hands of third parties create just as much of an equilibrium in the unease.

Blockchain does not judge, nor does it care where your source funds; and that within in and of itself is powerful. Being the last truly neutral ground, a sanctuary for those who have been cast out of their jurisdictions, the implementation of KYC is only a problem for those looking to leave Web3.

If the platform is centralized, KYC is understandable, if it is decentralized, then there should not be any.

MEV— Maximal Extractable Value

Ah, the good-old “art of on-chain extortion”. Either the best thing to happen to crypto since the advent of blockchain itself or the very essence of highway robbery in cyberspace.

Supporting: MEV is Good
MEV is a natural bi-product of a fair transaction environment. It is an added vector to earn more money, an incentive that drives competition and, in turn, network security.

As is the case with any other competitive venture, the innovation that arises provides benefits that are not always directly visible, primarily in the form of detecting operational flaws that help with tech optimizations.

Opposing: MEV is Bad
Only available to network operators, an audience that is specialty trained and technically inclined, MEV only exists at the unfortunate, unknowing expense of average users.

By imposing this hidden tax, users end up dealing with more executional friction, which in turn forces them to lose more than just money; they lose opportunity.

Verdict
MEV has an important role in the industry that has overall brought in more operators and kept more operators in play than there would have been otherwise.

Moving forward MEV will likely transform into a more benign version of itself; the days of absolute disorder happening at the node level will disappear. Projects like JITO on Solana leverage MEV as extra incentives for distribution to the project’s users, a trend that has caught the attention of teams on different chains.

This is a small sample of the ever-expanding set of controversial topics in the crypto space.

Do with this information as you will, but understand that every action has a reaction; and not every reaction is as it may seem on the surface.

Learn.
Then think for yourself.

This game is not about being right.

It’s about being profitable.

Can you handle it Anon?

See you on the other side.

Key takeaways
- Maximalists don’t like Multi-chain
- Multi-chain crypto economy provides better security
- Multi-chain crypto economy fosters healthy competition
- Multi-chain crypto economy is the realization of decentralization

As the name of this article might imply, we believe that moving forward, the perennial debate as to whether or not the crypto/digital economy will be based on a singular network has been closed forever, and the verdict has been delivered…

The future shall be multi-chain!

Who Cares?

At the heart of the crypto uprising that began over a decade ago (and the primary value proposition of the open, permissionless, immutable digital ledger technology) has been decentralization. 

Decentralization is a very abstract, subjective concept that demonstrates the diffusion of power/risk from a single source to many. It is on the back of this ephemeral primitive that we now have an industry worth north of 1.65 Trillion USD.

Decentralization is a concept that systematically arises throughout human history as global power shifts happen. As an empire falls, 100 new ones are born and contend to replace it. As companies hit their maturation inflection points, they begin to slowly deteriorate and give up market share to younger, more nimble, innovative competitors.

Cryptocurrency (the ultimate application of blockchain technology thus far) was born from the very idea of decentralizing money, separating it from state, and establishing a neutral economic environment.

Therefore, in order for crypto to actually live up to its promises, it must embody the essence of decentralization on every level; having a single network domineering over all of humanity's digital value transference would ultimately be antithetic to that message… not to mention ridiculously risky. 

Arguments Against Multi-Chain

Volumes have been written in opposition to a multi-chain environment. Many people, primarily early industry OGs and maximalists (Max Kieser), discharge multi-chain architecture in an attempt to protect their own personal interests. Some of the most prominent and indeed valid arguments have been enumerated below:

Technical and Economic Fragmentation
The inefficiencies of disjointed systems that fragment liquidity degrade user experience/functionality to such an extent that we ultimately end up recreating the same problems of siloed data systems prevalent in Web2.

This seems to only be a problem in theory. 

As empirical evidence would suggest, fragmentation has actually become an opportunity for bridge service providers and aggregators' business models to be built.

Diluting Security
Allocating all human, time, effort, and attention to securing a single system would result in much higher diligence and monitoring than if those same resources were split up. 

This seems intuitively true on the surface, but in practice, things materialize differently. If all human economic endeavors are secured by a single network, then that network becomes a central point of failure.

At some point, the cost of contributing to said security would become so insane that regular people and businesses would no longer be able to participate, and nation-state actors would be the only ones with enough capital to contribute. Resulting in a round trip back to centralized control.

Complicating Development
More environments mean more diversity in programming languages, logic, style, execution, storage, and everything else; meanwhile, having a single, universal ledger would allow for the training of a wider set of specialists based on standardizations. The clutter of multi-chains would just disincentivize potential users.

Not necessarily; in fact, not at all.

The variance in a multi-chain environment is actually more likely to be able to appeal to a wider set of developers. Each chain carries its own philosophies, expressed in its architecture, that resonate differently among developers. Moreover, human nature has a competitive element imbued into it; having developers competing with each other would actually produce greater results than if they were all working on the same thing the same way. 

Asymmetrically Enriching Private Groups
Well-resourced and intelligent private groups with specific skill sets would subvert the openness of such system to be able to endlessly launch new digital assets ecosystems, leeching from their audiences and lining their own pockets. Insert Cardano pun here.

There is some rationale behind this thinking, and in fact, it does materialize in some shitcoin projects; there are groups of shadowy super coders that are spitting out scams incessantly…

However, it is this very same open competition that invited Bitcoin, Ethereum, Solana, and the countless forks in between. 

This is a fake narrative pushed forth by the wealthy elites who are putting on a facade to confuse average people into supporting their arguments; it is the wealthiest that stand to lose the most in such an environment.

Arguments Supporting Multi-Chain

Early industry visionaries have been pushing the idea of a multi-chain universe long before the term “rollup” even existed. What are some of the points they used to defend the viability of a multi-chain cryptosystem? Let's see:

Economic Resilience
In the presence of a singular network, critical issues could have catastrophic results. If the entire human population depends on the Bitcoin blockchain for its activities and Satoshi suddenly appears to zero-day attack everybody, the world economy would come to a screeching halt. The damages would be felt for decades as trust infrastructure is attempted to be rebuilt.

Having a global economy that is not dependent on the success or failure of any single system seems obvious; thus, by splitting economic value throughout a multitude of independent networks, the world can continue operating uninterrupted.

Bitcoin goes down, freezing 30% of the value in the crypto industry with it. Ethereum continues to operate. Solana continues to operate. Businesses can conduct transactions. People can pay their debts. What's crazy is that even with the Bitcoin network down, the assets itself (BTC) would still be tradeable on any of the pegged networks (such as WBTC on ETH).

Technical Redundancy
Just as in the case of economic resilience, should any critical technological issues, bugs, circuit meltdowns, or worldwide electromagnetic disruptions from solar waves shock a system enough to derail its fluid operations, there will always exist alternative/supplementary system(s).

This gets into the weeds of validator nodes sharing security through architectures like Eigen layer or IBC as well as conversations around software clients.

Imagine there are 101 nodes all running the same client on network Z. Suddenly, the client trips out and the network becomes impossible to operate on. The community of users and node operators get furious with the network’s technical ineptitude and can seamlessly reallocate their resources to support another network.

Leveling Playing field
Fostering healthy competition by allowing anybody to contend for the right of something is a natural law. In a world of a single network, the very essence of competition dies, and a pseudo-communist regime rises.

How Does a MultiChain Future Look?

Like a 4 dimensional spiderweb that continues to expand in every direction at every vector point. 

Maybe there will be 100 base layer 1 chains, each with 100 layer 2s that have dedicated appchain Layer 3s.

Maybe there will be just 10 monolithic layer 1s with 10,000 modular appchain L2s built on them.

Sounds fancy, but in truth… Who the f*ck knows.

Over the years, the very concept of what a chain is and how it looks has evolved dramatically. New technologies (nested chains, rollups, sidechains, plasma, Eigen Layer, etc.) have shifted the paradigm of what it means to be a chain to begin with.

Just as back in the day, when the industry evolved from general-purpose hardware (CPU, GPU, FPGA) into ASICs, it has now shifted into a new era of application-specific chains (or rollups/rollapps). Moving forward, this will only accelerate. 

So Is a Multi-chain Future Good or Bad?

Regardless of what maximalists might think, a multi-chain world is superior in just about every way to its single-chain counterpart.

At the very least, all of the experimentation/innovation taking place contributes to solving issues of scalability, interoperability, and performance in more exotic ways than in a uni-polar regime.

Onwards 

Decentralization will ultimately win.

To the entrenched incumbent behemoths of the legacy financial world, we wish you luck with swift adaptations to the new multi-chain crypto world order. We anticipate you to launch private networks, only to have them deteriorate to the forces of Mother Nature and Father Physics.

To the early-stage innovators and builders, we send you our goodwill and an invitation to connect.

Let's build this multi-chain world together.

Thank you so much for reading,
Would love to hear any thoughts you might have.

See you On-chain 👋⛓

Let's welcome Crypto Spring with optimism, curiosity, and arms wide open.

Institutions are pilling in. 
Regulators are warming up.
Retail remains mostly uninvolved.

Opportunity can be heard in the conversations of crypto-natives discussing the powerful confluence of positive industry tailwinds (“resolving” FTX, clearing out Binance’s Name, etc) and macro events, including the Bitcoin ETF, Bitcoin Halvening, American Presidential Elections, potential Chinese liquidity injections, potential yield rate cuts, just to name a few, looking at us in 2024.

A lot of problems are finally behind us,
and there are many new ones ahead.

Without further ado, let's review some of the exciting expectations in the pipeline for this year:

Disclaimer:
* These are in no specific order.
** Nothing here is investment advice. 
*** These are not to be used for making financial decisions.

1. Market Cap Will Double. 

Market Capitalization is the barometer directly expressing the cryptocurrency industry’s economic value in the world. 

After hitting all-time highs of roughly ~3 trillion in November 2021, we went on to see lows of ~800 Billion in December 2022 and closed 2023/started 2024 at ~1.65 Trillion.

Marketcap growth happens in two ways: (vertically) existing assets rally, or (horizontally) new assets enter the ecosphere. 

As the eyewatering >500% rallies in Solana, radical influx of alternative digital asset ecosystems such as Celestia, Injective, Mantle, et al. and pipeline of upcoming launches (Manta Pacific, Dymension, etc.) would indicate, the coming cycle will bring an expansion in both directions. Coupled with the asset archetypes that are not included in this measure (such as NFT collections, private on-chain RWA, etc.), there are reflexive economic forces being suppressed, indicating a blossoming for the sector.

As we move throughout the year it is highly possible that marketcap will dip below where the year started, perhaps it might even lay dormant/tread sideways for multiple month; but ultimately we will end the year higher than where we began.

2. Rollups Become Industry Driver

Scaling and Interoperability have been and will continue to be two of the dominant, existentially important themes in the cryptocurrency/digital asset industry for the next decade. 

Being an extremely young sector sitting somewhere between the two, with even current leaders, including Arbitrum and Optimism, still in the middle of completing configurations (state validations, data availability, withdrawal windows, node incentivization, sequencer decentralization, etc.), Rollups have attracted so much capital, provided so much operational efficiency, and captured such a massive portion of developer mindshare that they have received an entire market sector of their own.

Previous layer 1’s and exploring the transition to rollup architectures (such as CELO with promises of being the first to instantiate decentralized sequencer sets); the modular thesis emphasizes the glory of flexibility in choosing where data lives and how it propagates only further supercharging the desire of entrepreneurs to launch new networks.

Just like ICOs drove the 2017 rally, NFTs drove the 2021 rally; Rollups will be the technological catalysts that drive the next rally.

3. $BONK overtakes $SHIB

Online culture is a fascinating paradigm that is impossible to fully grasp. Landing firmly on the left side of the crypto curve, memes (especially dog-branded memes) are the ephemeral degen plays that turn the average 80 IQ person into a filthy millionaire.

Every cycle has a leading dog meme coin, an expression of the newest generation cultural meta; first, we had DOGE, then we had SHIB, and now we have BONK.

DOGE had its ~75 Billion USD Marketcap, currently at $11.16 B
SHIB saw ~44 Billion USD Marketcap, currently at $5.29 B
BONK has so far seen a ~1.5 Billion Marketcap, currently at $0.65 B

Deployed as an SPL token on Solana, $BONK is rumored to be run by a team of highly qualified operators who know what they are doing. When compared to the other two dog meme behemoths, BONK is the only one actually generating a phat protocol revenue. 

Doge likely will not be displaced as the currency king of online dog culture. SHIB on the other hand, has higher fees as an ERC20, a broken initial coming-to-market strategy (with sending Vitalik 50% of the supply…), and a much weaker social presence than some of the newer projects; it is primed to be displaced by a newer better version.

4. Airdrops, lots of Airdrops.

Powerful in attracting attention, prompting involvement, and bootstrapping token distribution, airdrops are the ultimate marketing tool in crypto. 

Already playing out in late 2023 with some gigantic drops in the Solana ecosystem with $JITO and the SAGA phone, as well as within Comos IBC ecosystem IBC with Kujira, Injective, Osmosis, and others; Airdrops will continue to be extremely popular throughout 2024. 

Celestia staking is considered the holy grail (very interesting to see what comes of this). 

Polkadot has been silent during these layer wars; possible that this silence will translate into a surplus of airdrops as the ecosystem tries to catch up.

Regardless of where exactly these Airdrops come from, there are two things we can expect with a high degree of certainty: first, they will likely be tithed to a point system; second, they can be ridiculously lucrative.

5. Ethereum Will Outperform Bitcoin. Again.

Ethereum has been slightly lagging behind the market in terms of price performance. Actually, the lagging has been pretty serious.

While Bitcoin has grown by ~158% over the last 365 days, the MarketCap grew by ~110%, Ethereum has run roughly ~77%.

This underperformance has ignited a lot of negativity against ETH on social media platforms. Bashing and hate are a perfect counter-indicator for putting on a trade.

With an ETH ETF on the horizon, it's not impossible that a hate rally is in store. After the BTC ETF hype is juiced out, people will need somewhere else to look.

6. RWA Narrative Collapses

Massive. Enormous. Gargantuan market size. Endorsement from tradfi megalodons like BlackRock.

The Real World Asset sector caught some attention during the bear winter, and some of the projects in that space saw face-melting gains, including RIO (>3,650%) and NXRA (>150%).

Due to the unavoidable links to legacy financial infrastructure, RWA’s will have minimal (if any) benefits to the public cryptocurrency sector. Likely to be primarily private market deals that are subject to similar regulatory scrutiny, RWA’s might need to take a backseat and allow more public sectors to gain traction. 

Moreover, RWA’s don't possess any new breakthroughs; the sector is literally just legacy finance on blockchain-based rails. As we know already, privacy and compliance with local jurisdictions might render RWA’s still a tad too early.

7. DEFI will be Reborn

Being the sector expecting the heaviest regulatory headwinds has likely been a major contributing factor to DEFI’s relative underperformance.

To be fair, Decentralized Finance never really died but, as measured by global TVL, has yet to show serious signs of recovery.

With a multitude of exciting technical breakthroughs happening with leaders like SNX and UNI, coupled with the operational benefits of rollups and proto-dank sharding via the Dancun upgrade coming to Ethereum, it is a matter of time before on-chain yields become too attractive for people to pass on and the reflexive cycle begins to fulfill itself.

It is almost impossible to know for certain how exactly the TVL will shore up (in new projects or old ones) or where it will shore up(EVM, Cosmos, Solana, or all of them at once), but regardless, not having some kind of exposure would likely render a portfolio suboptimal.

8. Venture Capital will Grow

The amount of venture capital investment into the crypto space has been on a steady decline since the 2021/2022 hype top. Declining prices, dwindling interest, and increasing regulatory scrutiny have driven capital away.

Sparked by progress in the courtrooms, price appreciation, and the realization of inescapable macro liquidity shifts, VCs have once again begun to show interest in crypto.

In 2021, roughly ~29 Billion USD came in.
In 2022, roughly ~34 Billion USD came in.
In 2023, that number plummeted to ~11 Billion.

With the lowest quarter being marked in Q3 of 2023, Q4 saw a slight uptick, and moving forward, we anticipate seeing a trend reversal. Concrete numbers are undefined, but total sums greater than 2023 are highly likely.

To be clear, large VC investments do not immediately translate to price rallies, but they do serve as a good signal for what can be anticipated in the near future.

9. New Sovereign Nation BTC Adoption

El Salvador has set quite the example with its Bitcoin operations. The incredible international attention the country received for its forward-thinking policies has invited new migrants, stimulated tech startups, and even bolstered its balance sheet.

Coming out of multiple decades of debt, El Salvador is positioned to continue strengthening its economy perpetually by earning value through its volcanic mining as well as the appreciation of BTC that it buys on the open markets. 

It is very possible that other nations will recognize the powerful promises of sovereignty BTC carries and will declare economic alignment with it.

Which nations this will be is anybody's guess, but South America, Africa, and Asia might have some clues.

10. Emerging Markets Lead Growth

America is known for being the king of capital. Consumers spend more money here than nations elsewhere earn. Throughout the earliest years of crypto, it was American Capital that drove the industry into new higher highs; however, the ridiculous regulatory stance in the US has given emerging markets a chance to capture and control the growth of crypto.

The open, inviting atmosphere and some degree of regulatory clarity have positioned Asia (HK and Singapore specifically), the EU, and the UAE to drive the next wave of retail adoption.

Predicting what/how/why something will happen in crypto is a fool’s game; many attempts will be proven wrong, and many others will turn out to be right but poorly timed. 

Specifics are nearly impossible to nail down, but being directionally correct is very possible.

That is what these predictions should outline: a possible roadmap/framework for thinking about how the industry will continue to mature this year. 

The only thing that is certain,
Is the uncertainty.

Now go forth with unrelenting vigilance, tranquility, and peace;
Take your slice of the kingdom.

Live long & propser 🥂

Ending in absolute fireworks, 2023 was a year of cleansing and rebirth. 

After the calamities of 2022, the year started off shaky and uncertain, full of political intrigue, regulatory contortions, institutional backflips, and Gary Gensler. In spite of the ravaging negative headlines, waning retail spirits, and eerie price action throughout the year, so much fundamental progress was made that market forces couldn't resist the alluring call of a maturing giga-industry, and crypto came back to life. 

New projects were launched, new technologies were discovered, regulators were challenged, companies held layoffs, hackathons took place, and life-changing money was made.

It would be foolish (if not impossible) to cover everything that took place in a single attempt, but ultimately, the most important takeaway is that sentiments have shifted. We have begun to thaw from a prolonged bear winter and transitioned into colloquial "Crypto Spring."

To celebrate our transition and prepare ourselves for the upcoming year, let's recap some of the most notable events that took place:

 * These are in no specific order.

Political Progress

Due to its boardless, digital nature, when talking politics in crypto, the conversations must always turn global. 

Traditionally, countries tend to structure their legislation following the example set by America. However, the constant ambivalent, opaque, monotonous attitude of the US has pushed innovation offshore and given an opportunity for other countries, including the likes of Singapore, the UK, and the UAE, among other, to take matters into their own hands and become leaders on the regulatory front.

SEC gets Humbled

Losing almost (if not every) major battle of the year, most notably Ripple, the Securities and Exchange Commission has become a laughing stock, largely considered incapable of conducting its duties at protecting anything (besides the interests of insiders). Now synonymous with the sneaky, sleazy, two-faced persona of Gary Gensler, it seems that in order to regain its reputation moving forward, the agency will have to rethink its policies and pivot into a more friendly, embracing position.

Tornado Cash 

Sanctioned by the US Department of the Treasury's Office of Foreign Assets Control (OFAC), and its founders were arrested. The privacy-preserving mixer has been deemed a threat to national security because it violates KYC/AML policies. Thus the technology has been blacklisted and banned from the US, and any crypto address interacting with it becomes an enemy of the state.

LBRY Decides not to Appeal. 

Losing its case against the SEC in 2022, in which the ruling claimed that LBC digital tokens were, in fact, securities and that the entity behind LBRY failed to register the assets as such, the project has decided not to appeal the decision. The company has gone into receivership, but the network continues to operate. It is very possible that the company's assets are acquired by another crypto company, and the infrastructure that was built out, alongside its active community, merge into something greater than ever before.

NFT Projects are Met with Regulatory Enforcement.

 NFTs continue to be an asset archetype that has not been formally defined by the legal system. Nevertheless, 2023 saw the first round of action against NFT projects, including Cool Cats and Impact Theory. Both cases have been resolved without prison time and with multi-million dollar settlements, things that will set the precedent moving forward as to what the industry can expect.

Purging the Demons and Serving up Justice. 

The froth of the last cycle brought about lasting economic impacts; scar tissue in the form of fraud, manipulation, and poor protocol design lingers in the not-to-distant memories of the market. FTX, Sam Bankman Fried, Alameda, Genesis, Gemini, BlockFi, Terra Luna, Celcius, 3AC, and the gaggle of crooks have become a sore for the industry. The exhausting mental resources allocated to discussing the issues that transpired, finding who to blame, and pointing fingers has begun to subside. A lot of cleansing has taken place, but there are still a few loose ends that need to be squared off. 

Crypto is much more exciting than the processes taking place in courtrooms; hopefully, we can move past this sooner than later.

Binance and the SEC

After settling with the SEC for over $2 Billion USD for its slew of legal infractions, Binance was forced to change its leadership and mark the end of the CZ era. From humble beginnings as a crypto-to-crypto exchange to the single largest entity for payments, trading, investments, NFTs, and everything else, Binance has become the most recognized brand around the world. Countless millions of users, hundreds of billions of dollars, and hundreds of countries; the amount of positive value that this single company brought is impossible to quantify. 

Introducing Generation 5 Technologies

2023 marked a year of incredible technological innovation manifesting itself in horizontal expansion (new project launches). Scalability, Interoperability, and Privacy continued to be the core tenets of new discoveries. 

Arriving in many form factors, including alt L1s, Optimistic rollups, ZeroKnowledge Rollups, mult-sigs, and DEFI applications, the list of new projects powered by new technological primitives, with new go-to-market mechanisms and glorious airdrop campaigns have given rise to the next generation of blockchains. (Depending on how you count or who you ask, this would be the 5th generation of public blockchain tech).

Alternative Networks and Rollups

SUI, SEI, Aptos, Manta Pacific, Stargaze, Kujira, Astar, Blast, the list of new blockchain-based networks is ever-expanding. Each of these networks is running some kind of action-based incentive program and attracting TVL into their ecosystems. Each chain demands its own applications, teams, communities, launch, and operational capital, but that hasn't seemed to slow anybody down. 

Rollups

Becoming the de-facto scaling tech for EVM, Rollups have attracted the attention of some of the industry's most notable entities, including Coinbase and Binance. Proving their value by facilitating multiple times more transactions than legacy base layer ETH, it seems as though Rollups will become the interfaces for applications to conduct activity. Moreover, it seems as tho this is the tech that has caught the majority of mindshare.

Interoperability

A MultiChain future has only become all the more likely. Interchain operations with solutions from Cosmos's IBC, Polkadot's XCM, and, of course, LayerZero are facilitating more transfers than ever before. Bridges, including Wormhole, Orbiter, Stargate, Symbiosis, et al. are exploding in TVL. This is a trend that simply cannot, will not revert.

Bitcoin Ecosystem and Inscriptions

Being the oldest and largest crypto network of all, Bitcoin was for many years considered to be a somewhat stale technology that has long discovered its use case, and interest in it has peeked. 

Not so fast. With the introduction of smart contracts and inscriptions on Bitcoin, a new caliber of ultra-wealthy users that can now do something with the coins they have just been sitting on flooded the ecosystem. This has resulted in divisions amongst crypto maxis and brought massive transactional revenue bonuses to miners.

Price action of Q4

If you like Bitcoin at $20,000; your going love it at $44,000.

The apes, degens, and bulls are waking up and looking for somewhere to throw their capital in opposition to tradfi. The last quarter of 2023 brought mind-melting, eye-water gains to holders of crypto across the board. 

Memapaoloosa

Reinvigorated internet culture is starting to do its thing. Obscure meme coins like WIF, PEPE, BONK, and COQ are posting gains north of 1000%. Even though memes do not carry inherent value and tend to enter pronounced death spirals, their presence highlights the early stages of a recovering market. If memes are popping off, then one of two things is likely: either there is excess capital in the system, or OGs are preparing for an influx of retail. Either way, even if you don't make money on the memecoins, the wealth effect will inevitably spill over into other cryptos.

Solana's Rising From the Ashes

Beatin into oblivion from the FTX saga, Solana has broken all mainstream beliefs and become the underdog and best performer of the year. Beyond just the token's meteoric bounce from lows around ~$8 to over $120, the ecosystem has seen an influx of new users, glorious new applications, and functional improvements to the tune of an order of magnitude. Hosting one of the tightest, most resilient communities, Solana has become a platform for realizing sophisticated real-world applications and emerging market segments such as DEPIN. After a world-class Aidrop from the Jito MEV/liquid staking protocol, a pipeline of projects primed to release their tokens through a powerful network of distribution (The Solana Mobile phone); there seems to be no more talk of its death, just questions on how to best take advantage of the technology.

Spot Bitcoin ETF

It would be remiss if this is not mentioned. Perhaps the single most talked about crypto event of the year, many of the world's largest institutions, including the megalodon BlackRock, have filled for a spot in Bitcoin ETF. Unlocking the gates to institutions, a Spot Bitcoin ETF is in the cards for approval in 2024. However, as it stands, these ETFs will likely still be forced to settle in cash, which is a net positive but not as fundamentally impactful as having to settle in BTC.

The industry has mixed opinions on what is to be expected from this; on the one hand, there are those who want to buy into the happening, while others approach with more caution, implying it is a "sell the news" event. After the rumors began circulating and people started to front-running one another, the price responded with tremendous strength. Given the cash settlements, pent-up demand, confluence of macro events, and pre-committed capital that is already penned for inflows greater than $200,000,000 USD; the only thing that seems guaranteed is that no matter what, it is a matter of time before the instrument is live.

The Narrative Cycle

During the re-stabilization period, crypto was looking for narratives that would supercharge it. Throughout the year, narratives have been shuffled around from AI to RWA, to Alt L1s, Rollups, DEPIN, ETFs, and so on. 

Stablecoins continued to blossom; DEFI took a beating in TVL but has become much more secure, being the year with the least total amount of hacks. NFTs are starting to make waves again, arguably led by Pudgy Penguins and new Trump Card mints. An influx of new major market participants and an increase in participation from existing ones, including Google, Franklin Templeton, VanEck, and others further confirm the growth of crypto.

In short, 2023 was the best time to accumulate.

Those brave enough to shut out the noise and lead by investment have already been rewarded for their diamond hands. 

Many people are getting disappointed, thinking they have missed their chance; friends, the entire market cap of our industry is ~1.6 Trillion… The game has just begun.

History may not always repeat, 
but damn… 
It sure does tend to rhyme. 

Excited to be on this journey with you all;

I hope you have reaped the rewards of Crypto's past
& that your bags are ready to grow to the future.

See you all in 2024.

*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)

Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.

It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.

Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.

Today, Celo (CELO), the carbon-negative, mobile-first blockchain dedicated to “creating conditions of prosperity for all” through regenerative finance, will get a SWOT.

💪 Strengths (Internal) (Helpful)

1. REFI Positioning
A combination of DEFI and social good, regenerative finance is a movement that taps into ecological benefits to society and/or the environment. No network has remotely as much of the intellectual mindshare around innovations happening in this space as Celo. Affiliating itself with social good from launch, Celo has become the host of today’s leading projects, including Toucan, Kolektivo, Flowcarbon, Gooddollar, Glo Dollar, Impact Market, and others. Considering how underserved and under explored REFI has been as a whole, there is no upper bound to model the potential returns this as a sector can attract during the seasonal capital shuffling.

2. On-Chain Metrics Blossoming
After a painful bear market and drawn-out winter, the seasons have shifted, and the on-chain metrics have thawed. Celo has been showing strong, sustainable growth across the board. DAA (Daily Active Addresses) have been going parabolic since May 2023, rallying from 5k in December 2022 to around 200k exactly 1 year later, a clean 40x. Total addresses jumped from 1.5m to ~4m (a notable 2.67x). TVL has begun ticking up from ~$80m to ~$120m. Total amount of active, verified, smart contracts steadily rising beyond 33,000. Daily transactions have rebounded from their painful lows of around 100k per day earlier this year to around 400k now, and no signs of slowing down.

3. Focus on Stablecoin Payments 
Many people underestimate how still nascent and small crypto is relative to the enormous economic markets it is tackling. Remaining one of the largest financial sectors ripe for disruption, payments are tightly correlated with stablecoins, and stablecoins are tightly correlated with real commercial/retail adoption; therefore, the use case and value proposition that Celo is pursuing have universal appeal. Moreover, having a concrete vision and a clear market to innovate around does not receive enough recognition. The vast majority of alternative layer 1’s lack focus and try too hard to become the ultimate generalized solutions that can support every exotic use case under the degen sun. Celo can allocate its resources and efforts more efficiently and not waste time on things such as Memecoins. This is not to say memecoins are bad, just highlighting the nature of the project.

4. Network of Validators
Home to 110 validator nodes, owned by 78 independent entities, including some of the most significant Web2 technology companies on the plant, such as Google Cloud, Deutsche Telekom, Telefonica, et al., as well as some of the most well-known crypto and Web3 entities such as Binance, Polychain Capital, Blockdaemon, and others; Celo has the material support from a set of validators many dream of.

5. One Block Finality
A common area of concern in the context of public blockchain infrastructure, finality has become a definitive factor in the design preferences of financial institutions around the world. As it relates to retail finance, the quicker the finality, the more confidence the users have with their transactions, the more likely they are to return and use the product again. Celo has always had this at the front of mind in their operations. This “immediate” finality structure mitigates reorgs (something infinitely valuable at the enterprise level) and was possibly an important factor in Celo being able to build powerful relationships with legacy Web2 conglomerates.

6. Finite CELO Supply Inflation
Launching with 60% (600m) of the total token supply circulating (depending on how it’s measured), Celo has an extremely smooth emission model to release the remaining 40% (400m) of tokens over the course of 30 years (ending in 2050). At the end of the emissions, the token supply model would, in fact, become slightly deflationary due to the transaction burns. Moreover, the emissions are primarily allocated to community building and validator/staking incentives, which means they would potentially foster economically resilient networks of aligned actors. This is, of course, in addition to the most sensitive benefit of balancing the impacts of dilution on existing/early participants.

7. Transaction fee Payments
While most major blockchains constantly deal with the friction of forcing participants to acquire native tokens in order to interact with the networks, Celo has introduced semi-agnostic network fee payments, allowing transactions to be paid for in any of the approved alternative assets. Opting for such a model seems counterintuitive as it would defeat the existential purpose of the gas token itself; however, it is not unlikely that this friendliness translates to a higher degree of adoption. By having multi-asset fee payments, the network can, in fact, help bolster asset velocity and become economically intertwined with other projects.

😞 Weaknesses (Internal) (Harmful)

1. Gingerbread Identity Crises
Celo used to distinguish itself in the marketplace by playing the role of an independent, EVM-compatible Layer 1 blockchain network focused on mobile clients and payments (aka stablecoins). Recently, however, the project has embarked on a technical restructuring (known as the “Gingerbread” hard fork) to transition into an extension of the Ethereum ecosystem by becoming an OP-stack-based Layer 2. Even though this action was enforced by the community itself through a governance proposal, such a fundamental pivot can result in organizational chaos, which, if untamed, can result in the collapse of interest. If the project built its community on a specific set of fundamental beliefs and those beliefs change, it runs the risk of alienating previous members.

2. Low Network Earning vs MCAP
Validator earnings is a theme that plagues all low-fee, high-throughput layer 1 networks. Earnings are established based on how much validators accrue from transaction fees. Considering that most transactions on Celo are below <$0.001 and only a small portion of them are paid to validators, it comes as no surprise that the CELO network posted annual earnings around sub <$50,000 USD. When weighed against its floating capitalization of $324,577,949, we arrive at a ratio of 6,500:1. To be totally fair, as an individual metric to gauge a cryptocurrency’s “fair value,” this is incomplete, but can certainly be used as a component in building a more complete picture.

🧐 Opportunities (External) (Helpful)

1. Low DEFI Diversity
Currently sitting at just three (3) with Mento, Curve, and Uniswap controlling over 90% of Celo’s total DEFI TVL, the decentralized financial scene on Celo is craving development. Of natively built Celo solutions, only Mento has any material relevance with its some odd 60 million collateralized stablecoins minted; otherwise, the leading DEX is non-native, lending markets are effectively non-existent, and no derivatives/perps built on it. Young projects looking to gain center stage in an ecosystem and old-timers looking to expand to new horizons would find Celo a pleasant opportunity due to its lack of competition and EVM compatibility. It is almost certain that over the course of the next 12–24 months, this balance will change; the projects that rise to capture market share will bring abundance to the Celo social sphere.

2. Gingerbread Hard Fork
Activated at the End of Q3 as the initiation of Celo’s techno-economic restructuring, Gingerbread is a 2-phase process that will transform the network from an independent EVM-compatible Layer 1 to an ETH-aligned Layer 2. Introducing a multitude of changes, including the principle of “Ultragreen Money,” which will adjust the transaction mechanism to burn 80% of fees and funnel 20% towards a Carbon offset Fund. Supercharging finality guarantees with a second layer of security derived from the Ethereum epochs (so finality within Celo itself and the finality of its Data on Ethereum). Leveraging the OP-stack for its execution and EigenDA for posting its activity engenders Celo to both of those ecosystems, which could translate into powerful network effects. The existing validators will have their roles shift into sequencers, which would make Celo the first L2 to have a truly decentralized sequencer set. 

3. Support from Ethereum Ecosystem
By aligning itself with Ethereum, it seems more likely than not that many reputable protocols will extend operations over to Celo, especially when considering the extremely high level of compatibility that will be present. Already getting public praise from prominent members Vitalik and Joseph Lubin for their innovations, lending protocol AAVE has announced that it will be coming to Celo, bringing with it the mature infrastructure and stakeholder set already prevalent across many EVM-compatible networks.

😳 Threats (External) (Harmful)

1. DEFI Centralization
With just 3 protocols controlling over 90% of the TVL on Celo, the ecosystem is at risk of over-concentrated protocols that disincentivize new competitors. Liquidity is highly reflexive; where there is liquidity, more shall flow; where there is little, it shall dry over time. Certainly, the argument can be made that centralization counteracts fragmentation and increases market efficiencies, but having a high degree of reliance on a small group of actors introduces unwanted risks for Celo itself. Without stimulating competition, new ideas will not make their way to Celo and instead be attracted to more conducive environments.

2. Weak Social Presence
CELO does not have the ravaging maniacal die-hard community members or social presence common to most L1s. Even though this quaintness might seem understandable from the perspective of enterprise participants, those raw savage human emotions that drive market hype cycles through peek euphoria and keep it alive in the depths of winter are the foundation of markets. By not cultivating this kind of culture, it is only a matter of time until the projects that do capture all the creative imaginations and attract more users. Meme’s matter.

Takeaway:

Laying closer to the centralized side of Web3, Celo is a polished environment that emphasizes cooperation, coordination, and goodwill without degen tribalism.

Carbon neutrality, prosperity, cooperation, and a smorgasbord of other ESG-conscious, purpose-driven material is woven throughout all of its branding and content.

While generally tucked away from the average retail participant, Celo has received a lot of support and recognition from renowned industry insiders, including Vitalik Buterin, Sreeram Kannan, Joseph Lubin, et al., for its technical decisions, as well as operational integrations with global megacorps such as Kickstarter and Google Cloud.

Conclusion:

Fostering environmental well-being, supercharging capitalism with the narrative to become a tool for social good, and delicately balancing financial innovation, Celo is an intellectually stimulating project that has put considerable effort into distinguishing itself from others and defining its product market fit.

In the unique position of abandoning its original architecture in hopes of reinvigorating market interest with technology, Celo has become an interesting project to watch, if not for price, then as a case study on the merits of such fundamental structural changes.

One simply cannot fade the long-term potential of Celo. 

Thank you so much for reading,
I hope this serves you well on your journey.

Live long and prosper 🥂

*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)

Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.

It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.

Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.

Today, Aptos (APT), the alternative, new generation layer one born from the ashes of Meta’s DIEM crypto project, will get a SWOT.

💪 Strengths (Internal) (Helpful)

1. Flywheel of Innovation
Aptos is consolidating the best of all worlds by applying some of the most cutting-edge designs across every element of the project. From governance optimizations that allow delegating actors the right to post independent votes, transactional optimizations separating gas payers and transaction senders, allowing sponsored/subsidized activity, functional optimizations splitting consensus away from data dissemination, improving efficiency, alongside the MOVE language, MOVEVM, AptosBFTv4, Block STM, and an ever-expanding set of AIP (Aptos Improvement Proposals), the project is in a neverending cycle of self-improvement. Obviously, many projects can lay claim to their innovations, but the reasoning behind why this is highlighted for Aptos specifically has to do with how openly available all of the information is and how relatively easily it can be accessed.

2. Derived from Meta
Aptos is the result of the research and development conducted by Meta (formerly Facebook) during their attempt to launch the cryptocurrency projects Diem and Novi. After the regulatory heat against Meta became too difficult to deal with, the infrastructure was spun off into Aptos. Inheriting all of the knowledge, corporate support, and intellectual capital, Aptos was able to raise a cool $400 million USD in 2022 on the back of its reputation/merits. Having the notoriety and prestige of association with Meta gives Aptos potentially unlimited capacity for fundraising and networking. Moreover, given the extent of private deals that take place in crypto land, it is not impossible to rule out some kind of shadowy/indirect affiliation between Meta and Aptos.

3. MOVE Programming Language
Originally developed by Meta for its Diem crypto project, MOVE is a functional language based on RUST, which has become one of the most promising up-and-coming languages in the Web3 space. Avidly explored by new-generation teams today, including SUI, there is an entire ecosystem of projects now contributing to the progression and growth of MOVE. By leveraging MOVE for its architecture Aptos is building an army of powerful, specialty engineers and distinguishing itself from nearly every other project. Moreover, if the primitives that MOVE provides truly result in a user/developer experience that penetrates the mass markets, Aptos would be the thought leader in the space whom everybody else would refer to.

4. Intuitive Learning Modules
Developer onboarding has by far been the most critical bottleneck facing Web3 as a whole. New virtual machines, data structure, and logic already present an intellectual hurdle for devs to conquer; the onslaught of new languages has only further muddied the waters and made it that much less appealing for new programmers. Perhaps due to their experience and understanding of the Web2 world, Aptos has provided not just excellent documentation of its information but has gone beyond with tutorials in a highly comprehensive, inviting format. By reducing the friction associated with the Web3 learning curve, Aptos becomes a desirable place for new Developers to arrive.

5. Decent Decentralization
With over 125 validators currently active and a Nakamoto coefficient ranging from 15–17, Aptos deserves credit for achieving a notable level of decentralization, given how still young the project is. The decentralization is achieved through coordinated efforts between early-stage participants with locked tokens and a lot of delegating power and the Aptos foundation itself, diligently spreading their votes to maximally optimize for a more even distribution. This movement (no pun intended) is counterintuitive to the centralized-overlord image many degens paint about Aptos; even if the current levels of decentralization stay steady, Aptos would be more decentralized (at the validator level) than the vast majority of the projects on the first 10 pages of CoinMarketCap.

6. Staking Ratio Over >83%
Of the roughly 1,070,000,000 APT tokens in existence, there are 892,118,332 APT tokens, or just over ~83.37%, currently staked. While the caveat here being that the locked tokens belonging to early-stage investors are also staked, that remains among the highest of any tier-one staking crypto project. At this level, the staking ratio becomes a leading correlational (delayed) indicator that can be used to gauge the macro state of the network at a given moment. Based on how this metric fluctuates over time, it becomes possible to evaluate the level of conviction of the current stakeholder set and even model how the supply will flow. The most exciting change to observe will be how the unlocks impact it.

😞 Weaknesses (Internal) (Harmful)

1. Vicious APT Unlocks Upcoming
Starting in December of 2023, the rate of “genesis” tokens (those allocated to early participants) coming into circulating supply will increase, set to double the total supply in 2024 alone. With roughly 300 million tokens (~30%) already in circulation, the relative amount of new tokens making their way into the marketplace will potentially result in suppressed prices during upcoming rallies as earlier investors look to offload their positions. 

2. Locked Supply Staking
Aptos allows for the tokens that are locked away to be staked. The tokens earned are immediately liquid, creating a conflicting set of interests between user groups. The motivation behind such a decision is understandable: to entice early-stage participants with all the more economic incentives; however, allowing for this to take place creates a closed environment where only deep-pocketed, resourceful participants amplify their control over the network. Given how disproportionately large the amount of locked tokens being staked versus free-floating tokens is, the locked staking supply makes Aptos a “Rich get Richer System.”

3. Low Stablecoin Interest
Stablecoins are a direct expression of a network’s retail/commercial adoption. Coming in sub $50 million (USDC dominating >75% of the stable supply) and the presence of just a single project currently working within the Stablecoin segment, that is Thala with the MOD (Move Dollar), Aptos is very behind on this front.

🧐 Opportunities (External) (Helpful)

1. Pipeline of Megalodon Partners
Already locked in a deal with Microsoft that brings Aptos Move to the GitHub Co-Pilot and the Microsoft AI to the Aptos community. With its strong emphasis on gaming and NFTs, Aptos has been able to secure a multitude of partnerships with prominent organizations around the world, including NeoWiz, Marblex, Lotte Group, and others. Outside of gaming, areas such as ticketing with KYD Labs and collectible community Art with NBCUniversal have also caught some recognition. Moving forward, it seems that the pace of new partnerships and their significance will only continue to increase.

2. Chingari Application Integration
Ranked third by gross income and boasting over 100 million downloads from the Google app store, Chingari is considered to be one of the underdogs on the Web2 social media scene. Integrating Aptos sometime in the second half of 2023, Chingari empowered users with the ability to mint and transact in Aptos native digital assets. This single application, with its limited utilities and limited audience awareness resulted in a quadrupling of on-chain activity.

3. Synergies with Eastern APAC Region
The eastern APAC (Asia Pacific) region is an absolutely massive, developing market that has just begun to enter the crypto economy. Countries such as China, Japan, Singapore, Indonesia, Vietnam, etc., are home to highly digitized societies with a historical inclination towards gambling as a vehicle to escape their economic circumstances. Aptos has been putting forth much more effort to win the hearts of the APAC communities while the US has been stuck in regulatory limbo. In the event that the next crypto cycle is led by non-US countries, Aptos is positioned well to capture that influx.

4. DEFI Growth
Sitting at around ~80 million USD in TVL across its DEFI platforms, Aptos has a tremendous runway for new capital. Both legacy DEFI projects as well as newly built ones, stand to benefit from extending services to the Aptos Network. The lower the starting point, the greater the impact of inflows; moving TVL from ~80m to ~380m is a 375% increase, and moving it from ~380m to ~680m is 79%.

5. Integrations with External OG Protocols
 Alternative networks (including Ethereum, Solana, Binance, and others) have already established superiority in the degree of applications built on them. Meanwhile, Aptos is still severely behind in terms of the number of protocols in its ecosystem; there are still no EVM projects on Aptos, but SushiSwap has already announced its intentions to become the first one.

😳 Threats (External) (Harmful)

1. Layer 1 Competition
Layer 1’s are easily the most contended sectors of the crypto economy. Their foundational nature to the establishment of a digital financial system has attracted competition from the world’s brightest and best-funded teams around the world. Putting Ethereum aside, there has been an onslaught of new generation Layer 1’s, from Solana to Near to SEI, SUI, and beyond, that provide superior technological capabilities over the preceding generation projects. Moving forward, the competition that Aptos faces will continue to become more sophisticated, forcing the project to stay at the bleeding edge (or become the focal point) in order to remain relevant.

Takeaway:

Aptos is a serious force to be reckoned with.

Positioning itself as a very smooth, no-hype, no BS, technologically heavy project, Aptos is building a professional environment catering to a unique culture.

Not wasting its resources trying to battle other communities, Aptos moves forward with big, peaceful, focused strides.

Conclusion:

There was a lot not mentioned in this coverage, including the suave, quixotic images and qualities of technical cofounders Mo Shaikh and Avery Ching. The deep ties to Venture Capital. The social strategy.

The Supply policy.

Perpetual Supply inflation is as an element that is economically impossible to ignore, and Aptos has it. Usually, this would be deeply scrutinized; however, at a modest 7% tapering off to 1.5% by 2032 and a minuscule burning mechanism applied to all transaction fees, this seems to be a more balanced long-term approach.

In the middle of experiencing its first full cycle in crypto, The nascency of Aptos holds much promise for future waves of projects that grow the ecosystem with retroactive airdrops, potentially resulting in recursive wealth effects that spill over into the token.

Thank you so much for reading,
I hope this serves you well on your journey.

Live long and prosper 🥂

*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)

Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.

It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.

Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.

Today, Cosmos (ATOM), the interoperability OG and father of the IBC, will get a SWOT.

💪 Strengths (Internal) (Helpful)

1. AEZ
The Atomic Economic Zone is at the heart of Cosmos’s upcoming techno-economic overhaul. The purpose of the Economic Zone is to tighten the alignment of the ecosystem with the ATOM token. A multitude of networks, including Kujira, Agoric, Osmosis, Stride, Neutron, et al., have already integrated and pledged their diligence. At its most basic, the AEZ’s main focus is to have ATOM play a foundational role in the inter-chain activities and unifiy chains with universally applicable governance frameworks.

2. World Class Governance Community
Either legendary community-building skills, deviously clever teams, or a combination of both, Cosmos has achieved incredible levels of engagement both through its social and governance platforms. The core community is always active and involved in the proceedings, helping steer the project and uphold its interesting commitment to decentralization.

3. Adoption by Chains
Comos has seen an influx of projects into its ecosystem. Hosting over 46 networks so far, of which many are considered to be noteworthy (Osmosis, KUJI, Cronos, ThorChain, Injective, Secret, KAVA, Akash, etc.) and a pipeline of new leading projects, namely Celestia and dYdX, the positioning of Cosmos within the context of the greater industry could be tipping into the “Too-Big-Too-Fail” territory.

4. Contribution to Web3 Technology
From its consensus mechanism (CometBFT) to the inter-chain communications protocol (IBC) to its appchain thesis and beyond, so many solutions have tapped into the tech pioneered by Cosmos and made available through their SDK. Value in the form of new technological primitives can be found laden throughout their excellent documentation. If a project could truly be valued on its merits, Cosmos would dwarf 99% of other base layers.

5. Shift of Security Model
Cosmos has been undergoing tectonic transformations in its architecture. Previously acting as a relay point, the Cosmos Hub will now act as a point of unified security provision. Effectively, the shift signifies an emphasis on shared security (whereby multiple different networks leverage the same validator set). While there has been some valid rebuttal against using economic primitives (price) for security due to the implied relationship between price and security, the conversation has primarily been based in theory and cannot be proven until something happens. The new model just might be enough to help Cosmos stand out from the increasing pool of infrastructure providers in Web3.

6. Stake Rate over 67%
Stake rate is a direct expression of an ecosystem’s community’s willingness to support a project. With over 2/3’s of all ATOM staked, Cosmos happens to have one of the highest rates among other networks of the same caliber. Taking into consideration that ATOM was among the worst performers (purely from a price perspective) this last year, the fact that long-term stakeholders did not abandon their positions (in fact, actually grew them from 62% same time last year) shows deep commitment. The higher the stake rate, the more constrained the circulating supply and the sharper the reflexivity between demand and price. If this trend continues, it would be unlikely that ATOM does not reflect it.

😞 Weaknesses (Internal) (Harmful)

1. Economic Underperformance
While a SWOT analysis does not usually account for price action, it is impossible to ignore the fact that ATOM is one of the worst performers among tier-1 crypto projects. Regardless of the parabolic growth taking place across independent Cosmos chains and the market at large, it seems that market participants are simply not interested in ATOM. The expression of interest is similar to liquidity, a self-feeding mechanism where interest begets more interest.

2. Tokenomics
A contentious point that has long been discussed around Cosmos is the design of its core system; while the technology has been amazing and certainly seen adoption, the ATOM token’s economics have been lackluster in their ability to capture value. With its relatively high double-digit perpetual inflation, absence as a requirement for Cosmos chain’s fees, and inability to address these issues earlier, has resulted in a prolonged period of sub-optimal performance attributable to the inefficient initial implementation forces the project to ensure invisible costs in the form of early community members. The problem can be (and is currently being) fixed but it does not guarantee that the new model will not be flawed in its own right.

3. IBC’s Lack of Asset Interoperability
A lesser talked about nuance with the technical design of the Inter-blockchain-Communication protocol is the accounting system that takes place under the hood during the movement of assets between chains. Every transfer instantiates its own trail. ETH on Osmis is (osm)ETH) moving it from Osmosis to Kujira turns it into (osm-kuji)ETH). If moved to Cronos, the asset becomes (osm-kuji-cro)ETH). Therefore, it loses its composability because other ETH will have different trails depending on how it has been transferred. Imagine party A has 10 ETH in a liquidity pool on KAVA, and party B wants to provide liquidity in that same pool. Moving their 10 (osm-kuji-cro)ETH) to KAVA, party B’s asset becomes (osm-kuji-cro-kava)ETH) which is different than Party A’s (kava)ETH) in the pool; therefore, party B is unable to join the KAVA liquidity pools; unless there have been sophisticated customizations built in to accommodate that or they retrace their ETH’s footprint.

4. IBC’s Performance Waning
The Interblockchain Communications Protocol was once heralded as one of the industry’s most promising innovations in the interoperability space and contributed to the blossoming of Cosmos’s hosting of over >45 independent chains. However, it seems that over the last year demands for IBC have been dwindling. Total transfers are down over -38%, Unique senders are down -48%, and Unique Receivers down -48%. If this trend continues, it could be a matter of time before we see the once-glorified technology disappear into an oblivion of obsolescence.

🧐 Opportunities (External) (Helpful)

1. ATOM 2.0
Initiatives have been put forth by the Foundation to transform ATOM tokenomics. A multitude of parameter adjustments to address centralization concerns, value accrual, and inflation. Already slowly being rolled out through governance proposal 848, the staking rate has been cut from ~14% to 10%, lowering the real yield from 19.3% to 13.4%. With lower inflation, there is a higher proclivity from users to hold on to their assets and find DEFI applications for it. Value accrual will be imposed through the alignment of independent environments with the use of ATOM tokens to facilitate cross-chain settlements. As it pertains to centralization, Cosmos currently scores 8 on the Nakamoto coefficient, meaning that it only takes 8 of the 177 validators to subvert the network. Under the new regime, there will be disincentives put in place for delegators that over-concentrate their allocation; a tax that increases alongside validator balances and, in turn, economically incentivizes end users to increase their delegations to smaller validators.

2. Widespread adoption of IBC
This one is a bit of a wildcard, shot-in-the-dark, roll-of-the-dice potentiality, but one with gargantuan positive implications. In the event that the new ATOM token model delivers on its promise to adequately capture the value, and IBC delivers on its promise to provide seamless interoperability functionality, there is a good chance that Cosmos becomes further engrained into the industry through an acceleration of adoption.

3. Fork Proposal
 Jae Kwon, founder of Tendermint and co-creator of Cosmos, is known for his activism and radical attitude. He has recently come out and said that given the circumstance of Cosmos currently suffering from inadequate governance, it would be best to fork the network. By and large, forks a notoriously malicious event that can negatively impact the integrity of the original chain and result in communities being split. However, this appears to have an inverse potential for Cosmos as it would put an end to the continual disputes within the network and enrich the holders with new tokens. Be it purely speculative airdrop hunting or some genius economic resolution, talk of a possible fork has actually been accepted relatively well by the crypto markets. This can have very strong short-to-medium-term impacts on price as people try to front-run each other and qualify for the hard fork.

😳 Threats (External) (Harmful)

1. Terra Luna Debacle
Built with the Cosmos SDK, Terra was an IBC-compatible network that handled tens of Billions of dollars in UST transactions. After a spectacular blowout that literally wiped hundreds of billions from the Crypto market’s capitalization within days, the crippling whiplash crept across the entire industry, with Cosmos suffering a loss of over -75% 2 months post-mortem. Frankly, no direct value correlation between Cosmos and Terra Luna existed; however, based on the fact that their SDK was used, the image of Comsos has been tainted by possibly the most notable failures of any crypto protocol.

2. Declining Activity and Revenue
In spite of an extremely positive market sentiment, Cosmos has seen declines across the board in terms of its utilization. The amount of daily active addresses has shrunk from >17,000 to ~16,000, the amount of daily transactions fell by nearly 33% from ~63,000 to ~40,000, and average revenue fell by nearly 50%, from a laughable $4,000 to an even more laughable $2,000. Luckily, the project does not seem to rely on the revenue it generates to sustain itself, otherwise it might have already been dead.

3. Rise of Advanced Alternative Competition
Scalability and interoperability have been, are, and likely will continue to be the most aggressively researched sectors of the Web3 economy. With each new generation of blockchain-based technology, new superior solutions come to market with the capacity to outperform and displace predecessors. Rollups, Subnets, Parachains, Payment Channels, Nested side-chains; the growing amount of similar tech that enables similar capabilities currently available will likely continue to dominate mindshare and further squeeze OG’s like Comsos out of public consciousness.

Takeaway:

Jokingly referred to as the “Dogecoin for Intellectuals”, Cosmos is floating on the fringes between techno-economic paradise and irrelevance.

The architectural pivot towards becoming providers of a validator set for other networks is not something entirely new; other projects, such as Eigen Layer, are ahead in this regard. However, if Cosmos’s approach finds better market adoption, it holds a lot of promise for the ATOM token.

There remains an elephant in the room; valid rebuttals about a logical gap in Cosmos’s economic modeling. If the security provision by validators is based on their stake, then the security itself hinges upon speculative elements; if price goes down, then so does security.

Conclusion:

It seems that in spite of the internal techno-political headwinds, Cosmos continues to be a domineering force on the layer 0/1 scene.

Outside of what was mentioned earlier, is the fact that Cosmos has the support and material endorsement from many of the industry's Giga-brains (such as Chris Burniske from Placeholder Ventures) that make the case as to why Cosmos is a better option than its two leading competitors Polkadot and Avalanche.

Cosmos is living proof that even with an incredibly talented team, good intentions, innovative technology, and a flourishing community, nothing is ever guaranteed in crypto.

A cool piece of information about Cosmos that is hardly ever mentioned is the brilliance in the intentions behind the Cosmos Hub’s design. The Hub itself is just an account-based model based on an environment that does not support smart contracts. This minimalism is distinctly reminiscent of Bitcoin, where the product is hyper-focused and purpose-built to mitigate the attack vector surface area and prevent fees from running out of control.

Thank you so much for reading,

I hope this serves you well on your journey.

Live long and prosper 🥂

*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)

Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.

It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.

Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.

Today, Arbitrum (ARB), the industries leading layer two optimistic rollup, will get a SWOT.

💪 Strengths (Internal) (Helpful)

1. DAO Governance Structure
Arbitrum heavily emphasizes decentralization. Everywhere, from the website to the docs, to the blogs, and even the AMAs, the word decentralization is lavishly applied. The industry is already well aware that Rollups as a solution, by their inherent architecture, are more centralized; nevertheless, Arbitrum has put a lot of effort towards realizing its progressive decentralization approach by distributing a noteworthy degree of influence over the network to the DAO. Arbitrum DAO controls both public chains, Arbitrum One and Nova.

2. Community Orientation
Community in Crypto is the defacto ultimate asset and metric for gauging the viability/sustainability of a project. At the core of Arbitrum’s success is the extremely loyal community that has sprung up. More than just the quantitative factors, such as passing the million social media followers count, is the quality of that community. Scooping up a lot of members who were displaced during the last bear market cycle, Arbitrum has recruited people who are well-versed and capable of navigating/interacting with Web3. These people, for the most part, have become devout believers in the project by becoming stakeholders via the Airdrop. Subjected to wealth effects, most members have shown a reluctance to dump their positions and instead coordinate to help bolster the ecosystem (users of the ARB airdrop would rather help a Dapp increase its TVL or invest in some early-stage projects building on Arbitrum).

3. First Mover Advantage
Arbitrum was the first layer two/rollup to launch on mainnet back in August of 2021. Being the first on the scene allowed Arbitrum to build the strongest foundation of members, tooling, and influence over the narrative within the scaling sector. As the industry continues to grow, new incoming projects will look to Arbitrum for inspiration and technological solutions, cementing the presence of Arbitrum indefinitely.

4. Sequencer Decentralization
The most sensitive architectural element of rollups that has riled crypto-puritans (decentralization maxis) is the role of sequencers. Sequencers are network nodes that, as the name might imply, organize transactions and control the flow of activity. This kind of power in an economic setting can be worrisome for reasons of MEV; if a single entity is building the chain, they can theoretically dictate what goes when and how. Acutely aware of this, Arbitrum has been careful with its Sequencer design, implementing FCFS (first-come-first-serve) ordering mechanisms for transactions ahead of time. Moving forward, the project plans of further de-risking the ecosystems by decentralizing the sequencer role.

5. Stylus Upgrade
Upgrading its Nitro stack by adding Web Assembly into the mix. One of the fundamental bottlenecks that has long faced the Web3 industry is developer adoption. Of the ~28 million developers globally, crypto’s monthly actives are floating around ~20 thousand, or less than 0.1% of mindshare. A prominent point of friction is the need to learn new languages. Abritum believes that in order to onboard the next 1,000,000 developers, we must reduce the learning curve by allowing for the creation of contracts in any language while not breaking EVM compatibility. By synthesizing the EVM with a WASM-based VM, devs can sidestep having to learn Solidity and just be able to deploy code in Rust, C, and C++. Deploying through the WAVM also offers an order of magnitude of improvement in execution/operational efficiency, allowing for more radical use cases (such as bringing in AI models).

6. BOLD Protocol
Further contributing to its mission of decentralization, Arbitrum is implementing a new validator dispute system to optimize for permissionless validation. Based on an “all-vs-all’ model, BOLD (Bounded Liquidity Delay) will empower any network participant with the right to challenge the correctness of the chain. Ultimately, the objectives of BOLD are to mitigate delay attacks (where malicious entities have the ability to indefinitely postpone resolution by re-triggering the settlement before it completes) and improve safety and liveness. The sheer capability to implement a system like this emphasizes Arbitrum’s qualitative security measurements and sets them apart from other L2s that do not support fraud proofs (yet*).

7. Timeboost Integration
MEV is the notorious art of on-chain extortion, but only for the end users. Thus far, Arbitrum has done a decent job at combating MEV through its FCFS model and lack of mempool. However, MEV has proven to be an important element to address for the profitability of a network. Removing MEV entirely means removing the associated revenue that it could generate. With the implementation of Timeboost, Arbitrum hopes to extrapolate benign MEV (arbitrage and back-ordering) by introducing fast, sealed-bid, priority gas auctions. Similar to what Ethereum currently does, priority gas auctions allow for users to submit extra fees to ensure their transactions are included faster. Sealed Bid means that nobody will actually know any sensitive information about the transactions (existing in a privacy-preserving mempool). So long as this truly does not allow for evil MEV (sandwiching or front-running), then this would be a net benefit to the network operators that can now capture any loose value flowing through the network.

😞 Weaknesses (Internal) (Harmful)

1. High FDV
During Bull Runs, project valuations can reach irrational, psychotic levels. The younger a project, the more economic sense it makes for it to have modest valuations. Launching >11.6 Billion ARB tokens (~11.6% supply) via airdrop, with a unit price of ~$1.20, Arbitrum came to market with a Fully Diluted Valuation of over $12,000,000,000 right out of the gate. Two and a half years into circulation have passed, and the token remains floating around the same place. Going into the next cycle, the already massive capitalization can potentially suppress the upside action. 

2. Low Circulating Supply 
Deterrant for potential investors that understand the inevitable financial physics that accompanies increases in circulating supply. The lower the circulating supply, the more impactful the near-medium term sell pressure, and the more dilution that is to be expected for existing holders. With over two and half years of history and still a meager ~12.5% supply in circulation, ARB token holders will be deprived of potential gains.

3. Security Council
Arbitrum deserves immense credit for the elegance and sophistication of the solution that it has built. From the technology to the brand to the community, everything is top-tier. However, one sensitive point that should be highlighted is that the Arbitrum ecosystem is still ultimately subject to a ruling class of operators in the form of the Security Council. Regardless of the systematization of DAO governance and the fancy language used to describe the granularities of control, everything ultimately rests in the hands of the Security Council. The council’s authority can circumvent any community/DAO decision and deny upgrades. While this kind of behavior is unlikely, as it is in their best interest to be an emergency-only backup, it still remains a prevalent risk vector. 

🧐 Opportunities (External) (Helpful)

1. Layer 3 Orbit Solutions Stack
Reminiscent of Subnets in Avalanche, Parachains in PolkaDot, or hubs in Cosmis, Arbitrum Orbit allows projects to leverage Arbitrum’s functionality and primitives to launch their own custom networks. These networks are considered to be “Layer 3” in the sense that they reference Arbitrum as their “Base Chain.” These Networks are independent of any Arbitrum DAO influence and can be configured to operate with their own ERC-20 as the native gas token. While the direct value feedback to $ARB itself is unclear, the costs of setting up and posting data back to Arbitrum is a baseline benefit.

2. Coming-To-Market via Airdrop
Operational on mainnet for roughly ~2 very bearish years before the launch of its token, Arbitrum spent time building infrastructure, relationships, and community at a time when the entire market seemed bleak. Ultimately, launching its $ARB token into painful lows in crypto markets in March of 2023, Arbitrum became one of the few positive events that built up a hub of people buzzing about the future of crypto again. By opting for such a path, Arbitrum has become a foundational marker in the timeline of crypto history, a marker that likely cannot/ will not be removed.

3. TVL Leader
Floating around ~8 Billion USD, Arbitrum has by far the most total value locked in its network of all other L2s. In second place is Optimism, which has half (~4 Billion in TVL). TVL is a reflexive metric, meaning that as TVL grows, it becomes more attractive for future TVL to join in. Having the highest TVL inadvertently also means that other networks find you much more desirable for integrating with in order to tap into your liquidity reserves. Moreover, at a time when TVL across the industry was collapsing, Arbtitrum seemed immune, attracting ~6 billion USD, growing over >175%.

4. Support from Ethereum Ecosystem
Hosting over 521 applications (and growing), Arbitrum has attracted all of the major Ethereum Dapps, Uniswap, Sushiswap, Aave, 1inch, Gelato, and so on. As time moves on, Arbitrum will be able to benefit by providing for applications built natively on top of it, as well as, enjoy the benefits of applications built on Eth in the future.

😳 Threats (External) (Harmful)

1. Optimistic Transaction Model
Rollups come in two general flavors, Optimistic or ZK (also sometimes called validiums). Being at such an early stage in rollups, it is nearly impossible to predict which model would ultimately prove best, which one will be the most widely adopted, or which would provide the ideal techno-economic environment. While it is likely that there will be room for both (and even potentially new, yet-to-be discovered) options, it is likewise possible that some critical issues arise with the Optimistic model, such as a subtle way to squeeze invalid activity under the radar or causing indefinite network halts through engaging in “challenge periods,” which in turn could render the entire architecture of Arbtrium sub-optimal. To be fair here, this threat universally applies to every project that is leveraging an optimistic transaction scheme.

Takeaway:

Arbitrum is a triple-A grade project.

The leading Ethereum L2 Rollup by every measure.

Many of the points about Arbtirum have dual implications, such as the presence of the Security Council, which can have arguments on both its positive and negative implications. However, the space is still so young, lacking any long-term data to prove the merits of any independent design, that the accuracy of any assumption is hard to ascertain. 

From every angle, economic, social, and technological, Arbitrum checks the boxes. High levels of adoption and growing, new native ARB applications, such as GMX and Gains Network gaining traction, Google Cloud joining on as a validator in the DAC (Data Availability Committee), positive network wealth effects, active fraud proofs, the list of positives are substantial.

Conclusion:

With any new innovation comes a degree of tradeoffs.

Scaling has been discussed for nearly as long as blockchain has existed. Layer 2s have been discussed for a few years, but rollups as a technology have only now begun to seep into the foundation of the crypto industry. 

Arbtrium is a valid solution that holds the promise of solving one of crypto’s greatest bottlenecks. 

If there had to be a comparative drawn between Web2 conglomerates and Web3, then Arbitrum feels like the equivalent of a Microsoft.

Centralization continues to be at the core thesis of crypto and Web3. The promise of a sovereign digital economic system that radically shifts risk models away from governments and empowers users with full control over their money (and data), drives innovation and imbues the fighting spirit into this nascent industry. 

Without a doubt, it is important and must remain the core tenet, but the very definition of decentralization remains opaque. Arbitrum is doing an incredible job at balancing just enough efforts and conversation about decentralization as they are at understanding that not everything must be decentralized. The very ability for a project like Arbtirum to exist is decentralization in action. If somebody does not like it, they are free to go build their own competing network. When in an environment of 10,000 centralized entities, the environment itself becomes decentralized.

Thank you so much for reading,

I hope this serves you well on your journey.

Live long and prosper 🥂

*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)

Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.

It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.

Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.

Today, Fantom (FTM), the notoriously innovative, developer-loving, DAG-based, alternative EVM-compatible layer one blockchain, will get a SWOT.

💪 Strengths (Internal) (Helpful)

1. Decentralization Balancing
Being the logical/philosophical backbone of blockchain and Web3, decentralization is an abstract, subjective concept whose meaning varies depending on subjective bias. Impossible to universally define, striking an effective model of decentralization has proven to be elusive for every project (even Bitcoin). Fantom has put in obvious effort into constructing as balanced an approach as possible: allowing delegation, lowering validator hardware requirements (thus lowering the threshold for participation), 500,000 FTM (0.015% of total supply) requirement for validators, leveraging leaderless consensus et al. Whenever contextualizing the potential success of a network on a long-term time horizen, decentralization will prove superior to its alternative.

2. Gas Fee System
Previously, the FTM transaction model was a simple 70/30 split, with 70% of gas fees being distributed to validators and 30% being burned. In the latter half of 2022, Fantom adjusted the fee split model and rolled out two new initiatives to help bolster the ecosystem. Today, there is a 70/15/10/5 split, with 70% still allocated to validators, 15% to the Gas Monetization program, 10% to the ecosystem vault, and just 5% being burned. The results of experimentation with fee markets will have the potential to translate to stronger community effects and better value cycling.

3. Sonic Network Upgrade
Currently in testnet, but with mainnet in sight, a network upgrade that brings a smorgasbord of technical improvements will be taking place on Fantom. Dubbed “Sonic” and requiring no hard fork, the upgrade includes three key changes: throughput increases from the current 30 tps to over 2,000 tps, database storage reductions for validators by over 90% (from ~2,000 GB to ~300), and the introduction of the FVM (Fantom Virtual machine). The transactions per second metric receive its boost from optimizations in the Lachesis consensus transaction pool and modifications on the FVM. Disk space requirements were reduced drastically thanks to the new Carmen Database’s capabilities for live pruning, which in turn lower the barriers to participation, inviting in a larger potential stakeholder base.

4. Gas Monetization Program
Overall impact, better incentives = more sustainability. 15% of all transaction fees are allocated back to the creator of a contract that was involved in the transaction, creating a recursive value feedback between application developers and the network itself. Projects that meet a certain criteria (completed over 125,000 txs and been live for longer than 3 months) will automatically begin to retain a portion of all the activity that they elicit on Fantom. If AAVE creates $100,000 worth of network transaction fees it will claim $15,000 of that. With this additional vector for generating revenue becoming available, projects are further incentivized to build and market their products on FTM. Noteworthy that there are nuances regarding the transaction types that qualify; non-qualified transaction fees are aggregated separately and distributed to the network’s top 15 leading protocols on a quarterly basis.

5. Implementing Ecosystem Vault
10% of all transaction fees that were once burned will now be allocated to an ecosystem vault. Acting like a treasury for funding/rewarding projects building on FTM, the purpose of the vault is twofold: to breed stronger community relationships through coordinating how the vault’s assets are allocated and to incentivize application development. Additionally, since the funding is derived from a source that was previously discarded, interesting experiments around value attribution/utilization are taking place, which might ultimately yield macroeconomic insights that can contribute to the further evolution/optimization of society.

6. Lachesis Consensus Protocol
Fantom has always been recognized for its emphasis on technology. Showing its deep commitment to creating something innovative and useful, the project has implemented its own leaderless, asynchronous BFT (Byzantine Fault Tolerance) mechanism, capable of withstanding a 1/3 fault in node operators called Lachesis. In Lachesis, the network grows without having the entire validator set approve each individual transaction on the fly; rather, on-chain events are batched into blocks and appended as either confirmed or unconfirmed. The status of unconfirmed blocks is used to confirm the preceding blocks, which are arranged independently. This optimistic throughput is secured by occasional validator observations, and the incoming epochs confirm the preceding ones. 

7. Instant Finality
Finality has been a touchy subject in the public blockchain space. First-generation networks, such as BTC, have a model of “probable finality,” meaning that transactions never become irreversible, and the chain can experience a rollback at random. As the industry transitions to newer generations of technology, finality has become a focal point for consideration by enterprise-grade market participants. At its simplest, the faster the finality, the more security a user feels about their transactions, the more user-friendly the experience, the more likely they are to come back. Fantoms per-block finality addresses certain elements in counter-party risk that empower developers to create products capable of appealing to the masses.

😞 Weaknesses (Internal) (Harmful)

1. Multi-Chain Hack
Slammed with a ~126 million USD loss (of which the majority was USDT, USDC, WETH, and WBTC) that took place during an unforeseen attack. The happenings of the event itself coincided with Multichain’s CEO disappearing for over a month, ultimately due to legal implications, which have raised concerns and theories that the depegging and private key vulnerabilities were the result of coordinated insider mal intentions. Reverberating throughout the entire network, both end users and protocols suffered materially. In fact, one of the networks leading DEX protocols at the time, SpiritSwap, was forced to shut down its operations.

2. DEFI TVL Fleeing, Fast.
Falling from ~450 million to ~75 million, the year-on-year DEFI TVL collapsed alongside the broader crypto market; however, the severity of liquidity fleeing has only been amplified by the Multi-chain incident. While many networks’ percentage decrease has been showing signs of bottoming out, FTM has had the inverse take place, with the last quarter showing the most dramatic loss (-69%). Placed against the backdrop of increasing pricing and sentiment shifts, coupled with the decently high diversity score of 15 (15 different projects contributing to TVL), the dramatic loss of interest might indicate mass abandonment.

🧐 Opportunities (External) (Helpful)

1. Affiliation with Andre Cronje
Andre Cronje is a controversial genius in the space. He is a technically skilled thought leader who has contributed to many of the industry’s most prominent protocols, including YEARN and Keep3r. Coming out of nowhere, Andre was given a holy title, the same caliber as Vitalik, in the crypto space (rightfully so) that imbued the project with credibility. Granted, the role of Andre in the ecosystem was as an advisor; however, in spite of that, whenever personal news about him would arise, the project would react. In the event that Andre does rise above the challenges and becomes a hero of the industry, FTM will inherit some of that clout.

2. Warm Market Reception
Alternative smart contract networks, especially layer 1’s, whether they are EVM compatible or not, generally receive a lot of backlash. Every major platform, from Ripple to Solana to BSC to Arbitrum, has been subject to some extent of intellectual tyranny. Tribalism from communities such as Ethereum stirs up conflicts, constantly trying to hurt the images of competing platforms through insults. Interestingly enough, Fantom has somehow been able to side-step this drama and, in fact, has actually caught some support from the marketplace.

3. Market Over-reaction
Fantom is among the layer ones that have been hit hardest in the last market cycle. Excessive losses in TVL present an opportunity for it to come back, which would translate into massive opportunities for the protocols building on top. Abandonment by users opens the floodgates for massive shifts in the event of mass migrations to the network (growing from 3,000 DAU to 30,000 DAU {10x} can have more impact than growth from 30,000 to 90,000 {3x}). Whenever market conditions are restored, the reconciliation point for FTM would be higher.

😳 Threats (External) (Harmful)

1. Affiliation with Andre Cronje
Notorious for randomly disappearing and his “I test in prod” hot-take on development, Andre Cronje is a wild card in crypto. Getting caught in the crossfire of technical and governance problems that arose in some of his previously affiliated projects has caused a segment of the crypto community to turn their back on him. Positioned somewhat as a leader of the projects with which he is involved, the veil of uncertainty regarding what to expect from him creates an environment that large institutions might not be too keen to interact with.

2. No Native Stablecoins
Fantom does not have any native stablecoins, the crypto product with the greatest potential market size and market fit. Instead, Fantom leverages wrapped versions of the assets. The presence of stablecoins is a strong signifier that the chain has some degree of interaction with real-world use by consumers (payments); the lack of it would hint at the opposite. Having no major issuers of fiat {USDT, USDC} or crypto {WBTC, WETH} stablecoins, Fantom is missing out on a major sector of the market.

Takeaway:

A lot of work is put forth in the technology.
A lot of efforts towards becoming anti-fragile.

The more difficulties a project survives through and thrives after, the more valuable it becomes. 

It seems as though while the fundamentals are improving, social sentiment has been relatively weak. This divergence is reminiscent of previous market cycles when technologically sound projects became obscure only to rise like a phoenix from the ashes and melt faces.

The future is bright for Fantom.

A note on the absence of native stablecoins;
If this is a strategic move to position the chain by leaving out the native stablecoin market, the project becomes able to allocate the resources (finances and development) that would have otherwise been expended on stablecoins to other areas. Potentially honing FTM in as a product for non-payment-based utilities.

Conclusion:

Fantom is a contender for the throne of alternative smart contract platforms. 

Not mentioned, but deserves attention:
As far as tokenomics go, Fantom’s FTM is definitely worthy of exploration. With nearly 90% of the total max supply already in circulation, an inflation rate that is heading towards 0 (currently at 2%), existing for over five years, and having over 2,000,000 on-chain accounts, there is positive reflexivity building up in the asset. 

At the end of November 2023, Fantom’s chain experienced a surge in activity, spiking the daily transaction count from ~200,000 to over 5,000,000, setting new all-time highs (>2x above the bull market peak of ~2m). It is still to be seen what this could imply for the project, but this cannot be discounted.

Thank you so much for reading,

I hope this serves you well on your journey.

Live long and prosper 🥂