Cryptocurrency prices can change quickly, and some tokens can lose all their value almost overnight. However, Nekocoin is different. It has a unique protection system that helps keep its price stable, making it a safer option for investors. Here's a simple explanation of how Nekocoin works and why it’s less risky than other tokens.

(You wouldn’t want your tokens to end up like this…)

Why Nekocoin?

Nekocoin uses several methods to protect its value and prevent big sudden drops in price:

Layered Value Support

Nekocoin’s price stability comes from a “safety net” made up of three liquidity layers:

1. Base Support: Most of Nekocoin’s value is stored in this base liquidity layer, which creates a price floor. This layer is backed by OP tokens from Perpetual Protocol’s treasury, which ensures there’s a wall of liquidity to help protect Nekocoin’s value from drops.

2. Anchor Support: This liquidity layer helps manage sudden price changes in the low-to-medium range. The Anchor Support keeps Nekocoin from going through extreme swings when the price is relatively low.

3. Growth Support: As Nekocoin grows, this layer gives it room for price finding. When demand rises, extra funds are added to support the price as it goes up. This allows Nekocoin to grow without being too unstable.

(Compared to other meme tokens, Nekocoin’s price is more closely aligned with its market value, promoting stability.)

Floor Price Protection

One of Nekocoin’s most important features is its floor price protection. This means that even if all the tokens are released into the market at once, the price of Nekocoin will never fall below a certain minimum. Specifically, Nekocoin’s price can never drop below half of its original price at launch (TGE price). This floor protection gives investors more confidence because they know the price won’t crash below a certain point.

Note: The TGE price of Nekocoin is 0.00059907 OP, and the floor price is 0.00031846434 OP

Initial Token Distribution

Nekocoin’s token distribution is simple. There’s a fixed number of tokens, and here’s how they are divided:

• 25% for users

• 25% reserved for future rewards

• 50% for market liquidity

No tokens are kept for the team or venture capitalists, helping to prevent the market from being controlled by a few big investors. It also helps keep the price more stable and reduces the chances of huge price swings.

Andrew Kang

@Rewkang

It’s counterintuitive, but the best tokenomic design for a project (and retail) is to not have investor lock ups and have as much tokens to be as circulating as possible on Day 1 (except team, treasury)

One year cliff and 3-4 year vests are a poor standard that came about from a

1,026

9:19 AM • Oct 27, 2024

Continuous Support

The Nekocoin team will regularly convert between OP and Nekocoin. This helps stabilize the supply of Nekocoin in the market. Some of the tokens purchased will also be reserved for future rewards, which helps keep the coin’s value steady as demand grows.

(see: 0x1c32c6c317448467cb9ce6f5d73997c73685132b)

Conclusion

Nekocoin’s unique design helps protect its value and ensures it remains stable. By holding Nekocoin, investors can feel confident that the coin has built-in protections that prevent big price drops. Its layered support system, price floor, and transparent token distribution make it a safer, more reliable option compared to other cryptocurrencies. With Nekocoin, you get both stability and growth potential. 🌟

We want users to be able to experience the amazing Nekodex UX no matter what your financial needs are. Spot trading launched August 7 and now we are launching the next evolution of Nekodex: Earn vaults! Earn vaults are super simple. Deposit your USDC, and earn interest.

Neko's First Vault

USDM from Mountain Protocol backs the first Nekodex Earn vault. USDM is an RWA protocol, backed by real world assets, that gives users access to a low-volatility rate of interest. Check the Nekodex app Earn tab to see the latest interest rate 👍

USDM is just the start. We will offer more Nekodex Earn vaults in the near future. If there is a vault you would like to use, contact us!

How does USDM work?

USDM is pegged to the US dollar, and its value is backed by US Treasuries held by Mountain Protocol. Interest earned on the Treasury bills is paid to USDM holders in the form of more USDM, so your USDM holdings will increase with time. Mountain Protocol has taken steps to ensure USDM is safe, such as overcollateralization, smart contract audits and minimizing trusted custodians. Regardless, as with any defi product, you should DYOR and check out their risk page before depositing.

Note: USDM is not available to US citizens and other restricted countries, or for restricted activities. For more information, see their Terms and Conditions.

Collect more Nekocoin!

Nekodex Earn also gives users another way to collect more Nekocoin before the token launch (TGE)! All Earn deposits will count toward increasing your daily check-in boost 🙌

Start earning

Deposit now: https://app.nekodex.org

Timeline

• May 2024: Nekodex Playground

• Aug 2024: Nekodex Spot Trading Live

• Q3 2024: Nekodex Perp Trading Live

• H2 2024: Nekocoin TGE

Nekodex simplicity, now with spot trading

Sign up in seconds and buy & sell coins on multiple chains. Crypto has never been easier or safer. All coins always stay in your account and in your control.

On Nekodex you will find coins from a growing collection of chains, including Ethereum, Base, Arbitrum and Optimism. No bridging: buy and sell directly on Nekodex, and your coins will be sent to your wallet on the destination chain. No gas fees to worry about!

Leverage lovers please note perps trading will launch Soon™ so you can long and short your favorites in Nekodex.

More tokens at your fingertips

Before now, we’ve been living with a 1990s-internet crypto trading experience. You had to either trust centralized exchanges with control of your funds, or face a nightmare of buggy web3 wallets, bridges between chains, gas fee hassles, and more. Nekodex shows a new way is possible: super easy to use, and your coins stay safely in your own account.

Nekodex requires just 3 steps to trade. Set up an account on your phone in seconds, deposit funds into your account, choose & buy the coin you want. A few seconds later it will be in your account!

Try it now: nekodex.org

How does it work?

Nekodex is on the Optimism network (OP Mainnet). Using the UI that got rave reviews during the Nekodex Playground campaign, you set up and deposit USDC into your Nekodex Account. Once you have deposited USDC, you can buy and sell a long list of top crypto tokens in several categories including meme coins, AI coins, and more.

⭐For Playground users, there’s a one-tap migration process before you can deposit.

When you tap Buy, your account requests the coins using the Across Protocol. A bot (filler) on the destination chain buys the coins, and sends them to your account on the destination chain. USDC needed for the purchase is then sent to the bot.

The Sell process is similar. Your account sends the coins you want to sell to a bot on the destination chain, which sells the coins for USDC. The USDC is sent to your account on Optimism via the Across Protocol.

And the Nekodex UI is so smooth, you will forget all these details and finally be able to focus 100% on what really matters: getting the coins you want!

Nekodex Account

Nekodex uses a smart account system to make getting onchain 10x easier and safer. DeFi used to be a nightmare of in-browser wallets, seed phrase backups, gas tokens and gas prices, smart contract addresses …

That era is over! Nekodex works the way you expect: deposit, buy, sell, withdraw. Account creation is managed, secured and backed up using your phone biometrics so it’s easy, fast and always in your control. The complexity of DeFi has finally been conquered 🙌

After a solid year of development and months of meticulous testing, we're excited to finally unveil Nekodex! With its streamlined user experience and unparalleled flexibility, Nekodex was crafted using our 4 years of DeFi experience and introduces a host of substantial improvements. Get ready for groundbreaking features and enhancements that are set to dramatically improve your trading journey.

What is Nekodex

Nekodex is the beta version of Perp V3, where we’re bringing our Smart Liquidity Framework to life and partnering with ZeroDev, a leader in Account Abstraction wallet technology. Together, we've developed a silky smooth mobile experience that will change your conception of crypto trading forever.

Picture this: trading that’s better than your favorite centralized exchange – no waiting for for confirmation emails, no fear of your account getting frozen at random; and trading without the crypto headaches –  trade without wallets, gas fees, or signing at every step. Meanwhile your account is secured with your phone biometrics like FaceID, and automated backups using Passkey and iCloud/Google One. Plus, it’s all optimized for your mobile phone, giving you the ultimate freedom to trade anywhere. You get incredible convenience, yet you’re in full control of your funds, all thanks to the latest DeFi tech operating smoothly under the hood.

Designed to support extensive testing and gather public feedback, Nekodex exclusively uses Nekocoin $(=ↀωↀ=) as collateral. Here are the highlights:

Wallet-Free Onboarding - Smoother Than Centralized Exchanges:

• Innovative Login System: Nekodex is the first DEX to use Passkey and session key login with ERC-4337 account abstraction, meaning you don't need a crypto wallet to start trading. Set up with just a tap using your phone’s FaceID or TouchID, giving you full control over your account security. Secure Passkey backups with iCloud or Google removes the hassle and worry of keeping your wallet seed phrase safe.

• Smoother than CEX: Sign up in seconds, log in instantly. No wondering when the confirmation email is going to arrive or if you will wake up to a SIM-swap or a frozen account. Your trades are confirmed with a quick tap using Passkey-signed session keys so your trades are smoother and quicker than ever. You only need to sign with your Passkey for login and withdrawal.

Next-level Mobile Trading Experience:

• Trade on Your Phone Like a Pro: You won’t believe how smooth trading with Nekodex is on your phone. With Progressive Web App (PWA) technology and Passkey integration, you no longer need to jump in and out of a wallet app to connect and sign. Everything is just confirmed with a tap in the app. Trading on your phone just got 10x easier!

• Zero Gas Fees: Enjoy trading without the burden of gas fees. Thanks to the ERC-4337 standard, the Perp team covers all gas costs on Nekodex, ensuring a seamless trading experience.

• Diverse Market Options: Trade up to 50 perpetual markets powered by the Pyth Network’s super fast oracles.

Advanced Security:

Nekodex has been rigorously audited by the Sherlock community to ensure the platform's robustness and safety. Additionally, the use of Nekocoin $(=ↀωↀ=) as the only form of collateral cleverly minimizes the risk of material losses from security flaws. This proactive security measure ensures users are protected against unexpected vulnerabilities.

What is Nekocoin $(=ↀωↀ=)?

At the core of Nekodex’s trading experience is our newly introduced ERC-20 token – Nekocoin with its symbol: $(=ↀωↀ=). Exclusive to Nekodex, Nekocoin serves as the only collateral required for trading. Now here’s the best part: invited users can get free Nekocoin through daily airdrops! This means, you can start trading and earn rewards on Nekodex with 0 upfront cost. Plus, you don’t even need to pay gas fees. Literally zero upfront cost to earn rewards. Keep an eye out for more opportunities to earn Nekocoin, which we'll be announcing in the coming weeks.

Please note that you can only get Nekocoin from claiming it on Nekodex. Any other offer to get Nekocoin is a scam. You can verify the token address here. Additionally, for now Nekocoin is designed for use within Nekodex so it is not transferable and cannot be withdrawn. While currently not holding monetary value, there's an exciting future ahead: in the coming months, you will have the opportunity to convert your Nekocoin into a transferable version. The more Nekocoin you accumulate, the more rewards you can claim.

Note: In order to ensure fairness, anti-sybil measures will be deployed as required.

Get started!

Starting today, explore the possibilities with Nekodex by visiting https://nekodex.org. Initially, access to Nekodex will be by invitation only. If you're eager to dive in and contribute to refining our platform, we invite you to join our waitlist—check the app menu for the waitlist signup page

While Perp V1 exemplified the pioneering spirit with its cutting-edge vAMM, Perp V2 brought stability and composability to on-chain perps. Along this journey, we’ve also maintained an impeccable track record — knock on wood — of never experiencing a single security breach. And now, with immense enthusiasm, we proudly introduce: Perp V3.

This latest version marks a pivotal moment as we unveil a Smart Liquidity Framework for on-chain derivatives and a huge upgrade to provide a streamlined user experience.

The Problem

In our quest to create the ideal perpetual futures platform, there are three key things that we wanted to solve for in the new design of V3:

• Poor UX for Pros and Noobs Alike: User experience across the DeFi world is plagued by unintuitive designs, cryptic error messages, unpredictable outcomes, and more. Even seasoned DeFi users aren’t immune to the poor UX. The steep learning curve has discouraged new users from entering the DeFi space. And to be honest, Perp V1 and V2 did not do nearly enough to improve the situation.

• Providing Liquidity Is Hard — Most products currently rely on a single strategy which doesn’t adapt to market conditions. Strategy that works in low volatility environments may not work in higher volatile or up/down only environments. Additionally, providing liquidity on Perp V2 (built on Uniswap V3) was too hard for LPs given the constraints imposed on LPs.

• Future Proofing Protocol — Transitioning between versions often required a complete system overhaul each time (Perp V1→V2). This approach of full rebuilding from scratch, while thorough, it’s not sustainable for future scalability and agility. Recognizing this, we want to design a modular system that is future-proofed.

The Solution

Streamlined UX — A Breath of Fresh Air:

First off, we’re committed to making Perp V3 the go-to for DeFi newbies. Think of it as trading on a CEX, but you’re actually in the DeFi world. It’s about making things so seamless, you’ll wonder why it was ever hard. Here we focus on three key areas: security, onboarding, and an all-in-one stop.

• Enhanced Security: Perp V3 introduces biometrically secured wallets — think fingerprint or FaceID, powered by industry-standard Passkey. Just like how Apple and Google keep your phone locked down tight. No more private key-loss nightmares. Plus, the Perp team has been in the DeFi game since day one, the team is doxxed, and we are highly committed to integrity and user safety. Trust is built into every aspect.

• Seamless Onboarding Experience: With V3, stepping into Web3 will be as easy as signing in with email or social accounts–desktop and mobile included. No more browser extensions, no more endless approval signings for every transaction. A one-click approach that mirrors the ease of CEX but with the advantages of DeFi.

• All-in-One Platform: Perp V3 is more than a trading platform–it’s a complete crypto experience. Aside from increasing leverage to up to 50x and offering a range of advanced tools (limit orders, take profits, stop losses and more), V3 also offers low-risk earn products and educational resources, providing everything for beginners to kickstart their crypto journey.

Smart Liquidity Framework — The Game-Changer in Perp V3

At the heart of Perp V3’s innovation lies the Smart Liquidity Framework — the modular system meticulously designed for flexibility and future-proof implementation. Imagine a LEGO set for LPs and a Swiss Army knife for builders — that’s what we’ve built.

At its core, the Framework is versatile, designed to support any method for providing liquidity, as long as they can generate a price to be traded against, be it on-chain or off-chain. This includes models like XYK-style AMMs, RFQs, CLOBS and oracle-based strategies. We’re also actively developing unique strategies that, once refined, will be integrated seamlessly into this liquidity framework.

But here’s where it gets even more interesting — the unparalleled flexibility. Perp V3 users have the option to choose purely on-chain liquidity or a combination of both on-chain and off-chain solutions. This means retail traders can get the best orders through an efficient off-chain router. Projects can integrate directly with a variety of on-chain liquidity strategies and stay fully on-chain. The full range of products that can be built on top of Perp V3 truly cannot be imagined.

The enhanced UX and liquidity flexibility of Perp V3 combine to let us mimic an off-chain order book experience but keep the trading real with on-chain settlement, while preserving composability through fully on-chain pricing.

(A deep dive into the technicalities of the Framework will be shared soon.)

What’s Next

In summary, Perp V3 represents a significant leap forward in perpetual futures trading, offering liquidity providers and traders unmatched flexibility and adaptability. As we continue to evolve and grow, we invite you to join us on this exciting journey. We plan to release a beta version of Perp V3 to the public for testing. Sign up at https://perp.com/Perp-V3-Beta to stay informed and be among the first to try out Perp V3.

In this article, the event-driven approach is explained, along with some examples and tips on how to execute such a strategy so you can gain an edge over other traders and start being more efficient with how you play the markets.

Unveiling the Event-Driven Strategy

Event-driven strategies take advantage of the fact that investors tend to overreact to new information hitting the market. Any piece of new information which can impact the market can be defined as an ‘event’.

Popular in the world of traditional finance, a stock may be mispriced when there’s a significant event, such as an earnings call, where lower than anticipated earnings could precipitate a sell off. Also, leading up to the event, there is usually heightened volatility as traders place their bets on how this news will impact the price.

An event-driven strategy involves assessing the likely outcomes and waiting for the news to be released, positioning either ahead of time or as the new information is released, during which time the price fluctuates and opens up opportunities for a trader to make money.

This strategy can be carried over to the cryptocurrency market too. For example, the bullish price action in ETH ahead of the Merge and Shapella upgrades. However, there are two unknowns that are encountered with events-driven trading.

1. Not all events are known ahead of time: Two recent examples are the SEC suing Binance, and the labeling of ADA, MATIC and SOL as securities. As soon as these news items hit the market, they pushed the market lower. But no one (or very few) people knew these events were going to happen ahead of time, so you had to be quick if you wanted to capitalize off of this.

2. The market impact can be uncertain: While for some events like blockchain upgrades are bullish and known by most market participants ahead of time, there’s some ambiguity with others until they actually occur. A good example is the Fed’s interest rate decisions. Although the date and time at which they occur are known in advance, how price will react and whether the announcement results in a bullish or bearish trend is not known until it actually occurs.

As illustrated by the two points above, the ability to make fast decisions and go with the flow of the market following events is one characteristic of a successful trader. Preparation is also important, as this strategy requires an analysis of different potential outcomes, which can be fed into your trading plan.

Another point is that psychology tells us that humans tend to place higher emphasis on the impact of breaking news that’s negative. So in this case where something that’s perceived as negative hits the newswire, traders should look for opportunities to go long in response to an overly bearish, knee jerk reaction (and vice versa).

Advantages of Event-Driven Strategies in Crypto Trading

Event-driven trading strategies offer several benefits for cryptocurrency traders. The ability to make quick decisions based on market events can often lead to profitable trading opportunities. Here are some advantages of using event-driven strategies in cryptocurrency trading:

• Only make plays in the markets when it’s lively: With event-driven strategies, traders can make quick decisions based on real-time market events, ensuring they are only trading when the market is making moves and exhibiting volatility. With less time spent on charting and in the market, you can be more efficient and reduce your risk of taking large losses. This style also helps with avoiding ‘forced trades’ in boring or ranging markets, since you should only be active around the time of significant events.

• Gain an edge over other traders: Traders who successfully use event-driven strategies can gain an edge over those who do not utilize these proactive strategies. Although trading algorithms can react faster to news headlines and are more efficient over very short time horizons, human traders tend to do better at forecasting the long-term implications of events, since there’s always more context or other factors to consider.

• Lots of academic literature on this topic: events-driven investing has been thoroughly researched by academics and there’s large scope for implementing these findings into actionable trading strategies.

Get more creative: trading the news or important catalysts gives traders the opportunity to be more creative in their analyses, rather than following a set of rules or setups based on technical analysis. Also, this style is more versatile and performs well across different market regimes, whereas technical strategies may only perform better when there’s a bull market.

How to Implement Event-Driven Strategies

To implement an event-driven strategy in the crypto market, you can follow these steps:

• Monitor narratives and news, make a list of upcoming events.

• Analyze known events in advance and feed this into your trading plans.

• Utilize limit orders as part of your trading plan.

• Alternatively, if you don’t want to take a particular direction, you can position long on volatility through arbitrage.

Monitor Narratives/News

• Follow accounts like tier10k and activate notifications on Twitter.

• Join Telegram channels such as GAINS Crypto News, One Crypto Feed, and unfolded to stay on top of the latest news and developments.

• Stay up to date on narratives with crypto-focused newsletters like An Ape’s Prologue and Crypto Narratives.

• Make use of our DeFi Intel Twitter list!

Analyze Known Events and Feed this into Your Trading Plan

Preparation is key for known events: you should know how the market has behaved in the past to get an indication of how it may behave in the future. For example, we know that with macro events like the Fed’s interest rate decision and press conference, the price of major cryptos like Bitcoin and Ethereum trend in one direction leading up to the event, experience an impulsive move in one direction, and then reverses to continue in the initial direction.

The 15-minute chart for ETH-USD shown below illustrates why some people often caution against trading events, as it’s easy to get chopped up or FOMO in. On June 14th, ETH displayed large movements in both directions ahead of the Fed’s interest rate announcement, but ultimately the price of ETH fell sharply in response to the new information presented to the market during the press conference.

But if you know what you’re up against and how the price tends to behave during certain catalysts, then these patterns can help to inform your trading plan.

For instance, the movements made ahead of the Fed’s interest rate decision are usually reversed once the announcement happens. Also note how the sharp downward move in ETH continued until just after the close of the American trading session (around 20:45 UTC). Looking at patterns across more examples and becoming familiar with how the market usually responds, you can then start to draw up some ideas and rules about how to trade this particular event in the future.

Setting Limit Orders

Let the market come to you.

After drawing up a trading plan and analyzing how the market has behaved in the past, you can begin to generate some ideas and set up limit orders in advance to automate your trading as much as possible. You’re more likely to make mistakes in the heat of the moment, so setting limit orders can help to remove the emotional aspect from trading.

Hot Tub Arbitrage Vaults

As a passive option for those who don’t want to deal with the pressure of making quick decisions or acting fast enough when news drops, the Hot Tub vaults can be viewed as an events-driven arbitrage strategy.

As more volatile events occur, more arbitrage opportunities arise and as a result, the vault makes higher profits. For example, if you deposited into the vault when volatility was low and held ETH in the vault through the Merge and the Shapella upgrade, some of the profits you earn will have come from these volatile events.

You can also go long on volatility using options strategies such as a strangle, but this is a bit more complicated and may cost more due to the premiums paid for the option contracts.

Some Upcoming Catalysts for Crypto Markets

To give you some ideas on how to trade events, here are some upcoming catalysts that will impact the assets that Perp has arbitrage vaults for: BTC, ETH and OP. The Hot Tub vaults are the simplest way to passively earn returns by capturing the volatility that occurs from these events. Alternatively, directional bets can be taken via spot or perpetual futures markets.

• There are 4 Fed meetings remaining in 2023: These meetings reveal the latest interest rate decision and the press conferences that follow give the market more insights into the future path of monetary policy. Both typically lead to volatile conditions for the entire crypto sector.

• Another important macro event is the US monthly CPI reading: Along with the Fed’s interest rate decisions and monetary policy statements, the Consumer Price Index (CPI) is a key gauge of the US economy that is used to inform their decisions, so these events also tend to have a high impact on the market.

• There are 4 Fed meetings remaining in 2023: These meetings reveal the latest interest rate decision and the press conferences that follow give the market more insights into the future path of monetary policy. Both typically lead to volatile conditions for the entire crypto sector.

• Another important macro event is the US monthly CPI reading: Along with the Fed’s interest rate decisions and monetary policy statements, the Consumer Price Index (CPI) is a key gauge of the US economy that is used to inform their decisions, so these events also tend to have a high impact on the market.

• BASE launch on the OP Mainnet: expected sometime in August, the price of OP will likely see greater volatility leading up to and during this launch (as well as potentially acting as catalyst for bullish price action in the following days or weeks).

• Activation of EIP-4844: The DenCun upgrade for Etehreum is expected in October/November of this year, which will likely have a positive impact on ETH as well as Layer 2 tokens such as ARB and OP.

• Potential Bitcoin ETF Approval: the image below from Bloomberg terminal shows the timelines for the various Bitcoin ETF submissions that are currently under review. The ‘next deadline’ column shows the date for the SEC’s to make a decision. For example, the ARK 21Shares Bitcoin ETF’s next deadline is August 13th. One of three things can happen on this date: the ETF application gets approved, rejected or the SEC delays their decision. The furthest they can delay this particular ETF is December 27th.

As shown below, between August 2023 and March 2024, the SEC will have to make a decision on these ETF applications, so you should be prepared for any eventuality. News of a rejection could be bearish for BTC, while an approval will be bullish.

Challenges of Event-Driven Strategies

Events-driven trading is not suited to everyone and is generally not recommended for novice traders, since there are some drawbacks to this style.

• Correctly predicting the impact on the market is something that’s difficult to do, so it’s important to always have a plan in place and manage risk by knowing in advance where you’ll cut the position.

• You’ll also need to either analyze the impact well ahead of time or be able to think on your feet and identify good points to buy or sell when unexpected news drops. Experienced traders with a deep understanding of the cryptocurrency market are best placed to profit from event-driven strategies.

Final Thoughts on Events-Driven Trading

While more suited to sophisticated traders, events-driven strategies can help to provide you with an edge, better structure your trading activities and reduce the amount of time you spend in front of the charts or in the market.

The difficulties lie in being disciplined enough to follow through with your plan, being able to react quickly or think on your feet and conducting analysis ahead of time, which could take time and relies on having good knowledge of the market you’re interested in.

But luckily for those less experienced (or lazier) crypto holders, our Hot Tub arbitrage vaults can take the hard work out of events-driven trading by automating a delta neutral strategy (learn more about how it works in this article). The arbitrage strategy underlying these vaults contribute to compounding your earnings across different catalysts or events as time passes.. Just deposit and forget about trading, where the longer you stay in the Hot Tub, the greater the arbitrage profits you can earn as more opportunities arise during volatile periods.

Links

• Website

• Twitter

• Discord

• Youtube

Crypto holders can now earn yield on their assets in the Shower Room while they are queueing up to join the Hot Tub.

Whitelist Be Gone!: Improving the Hot Tub Experience

The Hot Tub is often at maximum capacity. People can’t get enough of the automated arbitrage alpha! Because deposit caps are in place, there are only a limited number of spots available at any time.

Have you checked out our new OP and WBTC vaults yet? Earn a sustainable yield with your OP, WBTC or USDC tokens here!

We’ll continue to expand the Hot Tub and make improvements. But to offer an enhanced user experience and better manage the high demand for Hot Tub, we are removing the whitelist process and launching Shower Room - the queueing mechanism that replaces the whitelist.

Each Hot Tub vault will have an associated Shower Room, enabling depositors to earn interest while waiting for more spaces in the arbitrage vaults to open up. With this new process, depositors will have priority and be the first to join as soon as there are any withdrawals from the Hot Tub.

How Does the Shower Room Work?

The Shower Rooms are uncapped and anyone can join at any time to queue up for the Hot Tub, while simultaneously earning yield!

When you visit vaults.perp.com and see a vault is near or at capacity, even though you can’t deposit straight into the Hot Tub, you’ll be able to queue your funds into the Shower Room.

You’ll also see your place in the queue and the estimated APR that can be earned. While you’re waiting to join the Hot Tub, your funds are utilized in Yearn’s Optimism vaults to generate yield.

A first-come first-serve system is in place to know whose turn it is to join the Hot Tub next. Our bot service will push users of the current priority into the Hot Tub automatically, at every hour in the beginning.

When space is freed up in the Hot Tub, the Shower Room automatically withdraws and converts your assets from Yearn’s vaults to deploy them into the Hot Tub vault of your choice. An outline of the new process is displayed by the flowchart below.

An example of the flow for an individual who joins the Shower Room for the ETH-USDC vault.

There are two scenarios based on whether the Hot Tub has hit capacity:

1. If there’s space available, you can deposit as much as you want to the Hot Tub.

2. However, if the Hot Tub is at capacity, everyone joins the queue to deposit a capped amount (maxDepositPerUser in the smart contract) when space becomes available. The maxDepositPerUser for each vault is as follows: 10,000 USDC, 6 ETH and 8,000 OP. Note that the amount deposited into the Shower Rooms is not capped. That said, you can deposit as much as you want to the Shower Room, but when it’s your turn, only the maxDepositPerUser amount will be transferred into the Hot Tub vault.

Shower Room Example

To illustrate how the Shower Rooms work, let’s assume you’re first in the queue and have deposited a total of 10 ETH.

When some space becomes available in the Hot Tub’s ETH vault (that is, the amount in the vault falls from the cap of 240 ETH to 234 ETH), then 6 ETH from your deposit to the Shower Room is automatically added to the arbitrage vault. The 4 ETH that’s left over continues to earn yield, but you’ll then be moved to the back of the queue to give others a chance to deposit.

You’ll also be moved to the back of the queue if you add more funds to the Shower Room. Also, there are no partial withdrawals: you can continue to wait to join the Hot Tub or withdraw the full amount. Your place in the queue will be shown on the UI.

Those with smaller cryptocurrency holdings benefit the most from the Shower Rooms. These users automatically join the Hot Tub when there’s enough capacity for their smaller deposit, effectively allowing them to skip the line and start earning arbitrage profits before whales.

FAQs

• Can I join the Shower Room even if I have already deposited into the Hot Tub?

Yes, the Shower Room is open for everyone, including those that want to deposit more of their funds.

• I am waiting for whitelist status and have already filled out the form. What happens next?

Good news is, you no longer need to wait to get onto the whitelist. You can deposit straight into the Hot Tub vault or Shower Room.

• What is the maximum deposit for the Shower Room vault?

The maximum deposit that will be transferred to the Hot Tub is initially set to 10,000 USDC, 6 ETH or 8,000 OP.

• I can just deposit into Yearn’s vaults myself, why should I use the Shower Room?

All Hot Tub depositors will need to go through the Shower Room. While you can earn yield by depositing into Yearn’s vaults yourself, you will not be placed in the queue for the Hot Tub vaults. Since Yearn’s vaults are uncapped, it’s expected that the yield will be lower than it is for the Hot Tub vaults.

• What are the risks?

Your funds will earn interest generated by Yearn’s vaults, so the main risk is exposure to their smart contracts. If there’s a bug or an exploit in the relevant Yearn contracts, then your funds may be at risk.

Have any feedback or more questions? Come and talk to us on Discord.

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Already we are starting to see that happen, with FalconX’s AI assistant Satoshi receiving a lot of attention in April 2023. But what tools can you use right now to help you to navigate and trade the crypto markets?

In this article, you’ll learn about the current state of AI tools for crypto investors, some of which can be used now, while others are worth keeping an eye on until they do a full launch. While these tools are pioneering the crossover between AI and crypto are far from a perfected state, we can expect that AI applications for crypto traders will blossom in the near future and improve over time.

1. ChatGPT Plugins

The first set of tools on our list are based on the most popular AI application to date: OpenAI’s ChatGPT. There are various plugins focused on cryptocurrencies that can be used to cut down the time you spend on research, such as the DeFiLlama plugin built by Kofi.

A quick walkthrough of the tool is provided below:

Kofi

@0xKofi

Introducing "DefiLlama ChatGPT Plugin"

Retrieve data on DeFi protocols and blockchains using plain english!

Here's how to use it

1,227

10:06 AM • Jun 15, 2023

However, it’s important to note that the plugins mentioned here all require ChatGPT Plus, which costs $20/month. Another thing to note is that you may want to double check the details, as the AI isn’t perfect and could potentially make some small mistakes.

To start enabling plugins for your research, go to settings, then ‘beta features’ and move the slider to activate.

You can then search for plugins by going to the store. Install the DeFiLlama’s one and then start querying the data, automate the creation of tables and charts and so on.

The plugin’s logo is displayed near the top of the screen if it is enabled.

To start analyzing and organizing cryptocurrency data using AI, you can enter a prompt like:

“You are now DeFi-GPT.

Your task is to use DeFiLlama to find the following information:

The 10 highest yielding pools for protocols on the Optimism chain, based on the 30d Avg APY. Create a table displaying these top 10 pools on Optimism, their 30d Avg APY, the base APY, the reward APY, and TVL.”

Another essential ChatGPT plugin is Smarter Contracts, which may help users to avoid potential scams by analyzing contracts and tokens. This plugin is especially useful for traders who scan for new pairs on DEXscreener or monitor trending contracts on Dune to find newly launched projects and get in early.

Some others worth mentioning are:

• Check the Chain reads blockchain data for Bitcoin, Ethereum, as well as others.

• CoinCap provides real-time price and volume information, similar to CoinMarketCap.

• There’s also Alchemy’s ChatGPT plugin, which is similar to Check the Chain, but available across the Ethereum, Polygon, Arbitrum and Optimism chains. However, you’ll need to join the waitlist to access this tool.

The possibilities are almost endless! There’s even a way to use ChatGPT to help you to create TradingView strategies with as outlined in this video by Analyzing Alpha (although it will require some knowledge of PineScript for the best results). While it’s not going to give you a strategy that is a definite path along the road to riches, it’s an inventive way to use AI to automate and hone your trading techniques.

Learn more about how to set up automated strategies through TradingView on Perp in this workshop!

2. ChatWeb3

Inspired by ChatGPT, the ChatWeb3 tool is suited to those new to the Web3 space as well as developers. As an AI chatbot powered by GPT and Langchain, the tool was built to guide users through their Web3 journey with easy-to-understand explanations of concepts, technologies and best practices.

There’s something for everyone, as this tool covers various topics and has several starting points: New to Web3, DeFi Trader, Web3 Developer and NFT Degen. Select which one applies to you and start building your web3 knowledge!

3. Dune AI Analysts

Want to find the Dune Analytics dashboard to answer your burning questions about on-chain data? Let us introduce you to some Dune AI assistants!

Dune.ora.so allows you to type any question and find all related Dune Analytics dashboards.

ora studio

@oralabs_

Excited to share that we're launching dune.ora.so today!

A new search experience for @DuneAnalytics powered by LLMs.

Now you can find dashboards by describing what you're looking for - like "how's dex activity on eth?" - rather than relying on keyword matches.

540

10:38 AM • Jan 12, 2023

For example, if you want to find the top traders, then you can type “top traders by PnL” into the search field and the results show all of the related dashboards that can help you to track successful on-chain traders. Click on the dashboard links, favorite them and do some regular monitoring to uncover alpha!

Another similar tool is duneai.streamlit.app, which was created by Primo Data, that enables the analysis of any Dune dataset with natural language.

4. KyberAI

KyberAI is a tool built by Kyber Network that’s currently in private beta, so you’ll have to sign up and do the referral grind if you want to access this as soon as possible to improve your trading.

The main feature is the KyberScore, which ranks over 400 tokens with a bullish or bearish assessment for the next 24 hours. These assessments are based on machine learning and are updated every 4 hours.

You can also benefit from automated technical analysis and a wealth of on-chain data for each supported token. The KyberScore can be combined with other indicators to find a confluence of bullish or bearish signals and screen assets that you want to trade.

Interested readers who want to learn more about KyberScore can do so by reading their documentation page.

5. Etherscan Code Reader

As a beta feature on Etherscan released in June 2023, the code reader makes it easy to understand any smart contract’s source code. One requirement is an OpenAI API key to get started with answering your questions about the code underlying a smart contract.

etherscan.eth

@etherscan

Code Reader (Beta)

Leverage the power of AI to seamlessly learn about any smart contract source code!

1,233

6:37 AM • Jun 19, 2023

To get started, simply enter your OpenAI API key, choose the GPT model you want to utilize, enter the contract address of interest and start asking questions!

The AI-generated answers makes it simple for non-coders to learn more about a particular smart contract’s source code and facilitate further research!

6. Claude2

Yes, you read the whitepaper. But did you fully understand it?

Anthropic’s Claude2 is a chat tool that allows you to ask questions from any file that you upload. This AI tool offers more functionality than ChatPDF, since it’s not just PDF files that can be queried, but also .txt and .csv files.

As a result, Claude2 can be used as part of the fundamental analysis for cryptocurrency projects by uploading whitepapers or other materials and asking the AI any questions. You no longer have to rely on others for a simple drill down of cryptocurrency whitepapers (or other materials): simply upload the file and ask away!

However, Claude2 has a limit on the file size and types that can be uploaded. For podcast and video interviews, AssemblyAI is a convenient tool that’s free which can be used to automate transcription and generate short summaries of the main talking points.

Simply enter the YouTube link of the video you’re interested in, click on “Next” and select the “Transcription” and “Summarization” options. The AI will run the models and take some time (15-30% of the video length) to produce the requested outputs.

So if you’re looking for full transcripts or just want to quickly get some key takeaways from a video without listening to the entire episode, then AssemblyAI is the perfect tool for this!

7. Scorehood

Scorehood is a mobile app offering AI crypto trading signals that utilizes technical, sentiment, and fundamental analysis. The overall score is converted into a recommendation: such as bearish, bear hold, bull hold, and bullish.

The components of these rankings are based on four scores: one for momentum analysis, another for technical analysis, another for volume and volatility analysis, while the final component is based on sentiment analysis.

At the bottom of each coin’s page, the Fibonacci support and resistance levels are shown along with the Relative Strength Index (RSI) and the current pivot point. You can get a 15-day free trial to try Scorehood out by downloading the app via the Apple App Store or Google Play Store.

8. CoinScreener

Like ScoreHood, CoinScreener is another paid tool that uses AI algorithms and technical analysis to provide trading signals.

As well as AI signals, there’s also the top trader tracking feature, which allows you to see when the most profitable traders open or close positions. There’s also the unusual volume and whale tracking features, helping CoinScreener users to spot big moves before they happen.

A copy trading feature is also in development that automates the CoinScreener AI signals to open positions on your behalf.

9. Pepe Analytics

Pepe Analytics is an upcoming platform aimed at the most risk-loving degens who want to be the earliest to new memecoins, offering four core features that will use AI to produce predictability scores: 1) smart contract audit aggregator, 2) social analytics, 3) user analytics and, 4) deployer data.

The platform is token-gated, where coupons (which give holders access to the platform) were sold as NFTs for 0.35 ETH. The sale is now over, but these NFTs can be purchased on the secondary market, with a floor of 0.75 ETH at present.

While the floor price isn’t cheap, there is a 420 limit, so it differs from some of the other alternatives in this list that accepts any paying customer. Given that the NFTs are limited, the alpha generated by the platform remains scarce.

Summary

The intersection between AI and crypto is a fascinating development and we expect more tools to be released in the near future to assist crypto traders as this technology improves. This article has covered some of the most popular AI tools, some of which you can use today while others that are due to launch in the near future.

Are you using any AI tools as part of your investing or trading strategies? Have you used any of the tools in this article and have any positive (or negative) feedback you want to share? Which tools are not included in this list that you have found to be useful? Let us know via Twitter or our Discord server!

Disclaimer: We do not guarantee the effectiveness of safety of any of the tools or tokens mentioned in this article. This article does not endorse any of the tools mentioned or constitute financial advice, and is meant for educational purposes only. You should always DYOR before paying for, or using, such tools.

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Grid Trading Explained

Grid trading is a technique utilized by institutional traders that seeks to capitalize on ranging or trending markets by placing limit orders or stop limit orders at fixed intervals. There are many different approaches to grid trading but the general idea behind it is that in cyclical markets, we can trade in a way where we don’t have to care about the entry price and just slowly build a position to scale into a long or short. 

One approach is to work against the trend by buying an asset at a low price and selling at a high price, which does not require you to take on a directional view of the market. With no requirement to predict where the price will go next, you can focus on managing the positions and figuring out where to exit with a profit. 

For example, if the current price of ETH-USD is $1900, one strategy involves placing limit buy orders at $50 increments below the current price and limit sell orders at $50 increments above the current price. When the price falls, one or more of the buy orders are triggered and the trader ends up with a long position. A trader using a grid system to build a long position will bring their overall cost of entry down as the market moves lower. 

Once the price eventually rises, the sell orders will be executed and closes the long positions at a profit. If the price fluctuates within a certain range, then both the buy and sell orders will be triggered and the grid trading strategy is more likely to be profitable. 

By enabling traders to average out their entry price, grid trading strategy has much less risk as compared to going all in at the same time while also reducing the pressure to get the perfect entry. By embracing the fact that we don’t know where the price will go, a grid trading system can help you to avoid getting stopped out and prevent you from racking up losses when there are fakeouts. 

The main components of a grid trading strategy include:

• Market: which asset you want to trade. 

• Lower bound: set the minimum price level for the grid, based on the market’s price range or volatility. 

• Upper bound: setting the maximum price level for the grid, based on the market’s price range or volatility.

• Grid number: the number of orders in the grid, which determine the gap between the buy and sell orders that are used to scale into positions. 

• Position sizing: the size of the position for each of these intervals. 

• Risk management: some rules to exit a grid, such as using a stop loss or a certain percentage drawdown to exit the trade and cap losses.

A couple examples are explained below in detail to illustrate how this strategy works, why it can be more effective than betting on a certain direction and how it may be able to improve your trading performance. 

Grid Trading Examples

Grid trading can take many forms, where one approach trades against the trend. The best buys are made when the price is declining or when there’s ‘blood in the streets’.

Similarly, it is better to ‘sell into strength’ rather than go short when the price is already heading lower and establishing lower lows. Another approach is to trade with the trend and profit from strong momentum in one direction or the other. 

Let’s take a closer look at these two different approaches in turn. 

Buying Blood and Selling into Strength with Grid Trading

The price of ETH is currently trading just below $1900 and has established a range between $1940 and $1840 over the past 6 days. When setting up a grid strategy, the upper limit could be $1940 while the lower limit could be $1840. 

The next parameter to decide on is the grid number, which refers to the maximum number of buy and sell orders. 

Let’s say we go with a grid number of 10, which means 5 buy orders are set between $1900 and $1840 at $12 intervals (at $1888, $1876, $1864, $1852 and $1840) and 5 sell orders between $1900 and $1940 at $8 intervals ($1908, $1916, $1924, $1932 and $1940). 

The resulting grid is displayed by the chart below (an example of an arithmetic grid). Another option is to use a geometric grid, which would place the orders using a fixed percentage change from the starting price (instead of a fixed dollar amount). 

As long as the current range is respected by the price of ETH, meaning that it continues to trade between $1840 and $1940, then the grid trading strategy is likely to be profitable. As a result, the trader does not need to worry about picking a direction for ETH. The 5 buy orders will all be in profit if the price dips to the bottom of the range at $1840, but then finds support and rises into the $1900’s. 

Compared to the case where a trader goes all in at $1888, the grid strategy enabled the trader to get a better entry price by slowly scaling into a long position. The average entry for the grid trading system would be $1864 if each buy order uses the same position size (although you can also vary position sizes to buy more as the market approaches the grid’s lower limit). 

However, the downside of grid trading is that if a strong trend develops, then the position becomes larger and larger, resulting in ever-increasing losses. 

For instance, if the price breaks below the $1940-$1840 range and decreases to $1800, then these 5 buy orders incur losses. And if the price continues moving south, then the loss becomes larger. Therefore, it’s important to use small positions for each order. It’s best to think of grid trading as slowly scaling in and out of positions over a long period of time to generate returns that are slow and steady. 

It’s also important to set a stop loss in case a price trend develops to minimize any losses. Alternatively, set a rule for the maximum percentage drawdown you’re willing to accept before exiting a grid. 

Trend Following with a Grid Trading Strategy

The example above describes a grid trading strategy that goes against the trend. However, for a strategy that follows the trend, it looks slightly different. 

Instead of placing limit buy orders below the current price, stop limit buy orders are placed at certain intervals above the current price to take profit from an upward trend. To take advantage of a downward trend, limit stop sell orders are placed at certain intervals below the current price.

An example is shown in the chart below for OP-USD. The current price is around $1.23 and the chart shows that the market has recently fluctuated between $1.05 and $1.50. To profit from an upward trend, several stop limit orders to buy OP are placed at $0.03 intervals above the current price. 

Given the market has recently hit highs near $1.50, the buy orders will open long positions as the price moves higher and a limit order to close the position can be set somewhere between $1.40 and $1.50 to profit from a bullish trend. 

On the other hand, profits can be made during a downward trend by placing several stop limit orders to sell between $1.20 and $1.11. The first stop limit sell order will be triggered when the price falls below $1.20 and the short position will gradually increase as the price dips below $1.11. Similarly, the short position can be exited at a profit somewhere in the $1.10 to $1.05 range using a limit order. 

Compared to the case where a trader goes all-in on a breakout in either direction, the grid strategy scales in as momentum builds, providing a better risk-reward profile. As with the previous example, stop losses or a rule for the maximum drawdown for your account can be utilized to manage risk. 

Other Considerations For Grid Trading Systems

The major difficulties involved lies in deciding the price range in which to place the grid, which should be adjusted frequently to account for the volatility of the market being traded. 

In the first example, we saw that ETH-USD was trading sideways between $1840 and $1940, but if volatility starts to decrease, the grid can be adjusted to lessen the gap between the lower and upper limits. On the other hand, if volatility becomes much more elevated, then the grid should be extended to account for larger price fluctuations. 

Grid trading also requires an estimation of how far the price may go in either direction. Traders can use tools like the average true range or support and resistance levels to determine the lower and upper bounds. 

Similar to market making, grid trading requires active management, meaning you have to think about how to trade your way out of these positions to generate a return. A big move in one direction or the other can cause big drawdowns if you’re trading against the trend. So you’ll need to focus on your exit strategy and make an informed guess of when a trading range has been invalidated or when a trend may start to reverse. 

Finally, another factor to consider is that when there’s consolidation in the market, you’ll end up holding a position over an extended period of time. If you’re using perpetual swaps as part of a grid trading strategy, this could result in increased costs depending on the current funding rate.

Summary

In summary, grid trading is a non-directional strategy that embraces the randomness of cryptocurrency prices and can be used in sideways markets or trending markets. To conclude this article, it’s important to remember the following points. 

• For sideways markets, limit orders to buy are placed below the current price, while limit orders to sell are placed above the current price. As the price fluctuates within the grid, you are effectively buying low and selling high, generating a profit no matter what direction the market is heading. 

• For trending markets, stop limits orders to buy are placed above the current price, while stop limit orders to sell are placed below the current price. When the price breaks out in either direction, the position size increases and goes with the flow of the market, earning profits when there’s a strong trend in either direction.  

• The grid trading strategy is not for everyone: it is best suited to those that have a significant amount of capital and have a lot of patience. Also, this style of trading may be attractive to individuals that either have little knowledge of technical analysis or don’t think that it works at all. If you’re looking to make money fast or you don’t have a lot of capital to begin with, then a grid strategy is probably not going to be the best option for you. 

• The main benefits of this system are: it is a simple strategy with a high win rate that requires you to pick out the key price levels you think will be respected. Also, there’s no need to predict the market’s direction, reducing the pressure to find the perfect entry. Finally, the strategy can be automated, helping to remove the aspects of emotions and timing from the equation. 

• However, there are a few downsides for these systems. Grid trading delivers a slow and steady return, so it’s best used if you have a significant amount of capital and you can be very patient. Some monitoring is also required and you have to make decisions about where to exit at a profit using limit orders or stop limit orders beforehand. Finally, if there’s elevated volatility and the asset experiences sudden and sharp movements, then this can cause large drawdowns.

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1. Find a Job in Crypto 👨‍💻

Discover opportunities with crypto firms (many include payment of salaries or bonuses with tokens). To see what openings are out there, start browsing platforms such as Crypto Jobs List, Cryptocurrency Jobs, CryptoJobs, Pomp Crypto Jobs, and Proof of Talent.

Competition is fierce in the crypto industry and landing a job is easier said than done. So here are a couple of alternatives if you cannot find any suitable openings (or are already employed):

• Join an ambassador program: many protocols and projects pay ambassadors for promotion and word-of-mouth marketing.

• Accept crypto as a business owner: if you run your own business, consider setting up a crypto payment option using services such as BTCPay Server, CoinGate or NOWPayments.

• Try your hand at freelance work: search marketplaces like cryptogigs, CryptoTask, LabourX, and Latium for small gigs.

2. Bounties & Giveaways 💰

People with the right technical skills can earn significant amounts by helping DeFi protocols become more secure through bug bounties on platforms like ImmuneFi and Sherlock. But bounties are not just for those that are smart contract whizzes though! Content creators can also earn bounties for promoting a project and generating greater awareness, which are usually advertised through a project’s Discord server.

As well as bounties, giveaways are another avenue to building your crypto holdings with relatively little effort. Many crypto projects host giveaways through AMAs, competitions, and promotional campaigns. The best way to stay updated on giveaways is to join the newsletters of different apps and projects.

But be vigilant as many scams are disguised as giveaways: never ever send crypto to someone you don’t know, secure your private key, secret seed phrase and personal information, avoid sharing this information in the promise of getting something for nothing and always remember to do your own research!

3. Blogs & Vlogs 🖊️📽️

Many successful bloggers, streamers and video makers have earned substantial sums from Web2 via monetization on platforms like Patreon and YouTube. But the emergence of Web3 alternatives offers new opportunities and greater promise for creative minds.

For writers, there’s Mirror which allows anyone to turn their writing into an NFT and set a price in terms of ETH for people to collect their work. Just by setting a cheap price of 0.001 ETH and 100 people collect the article as an NFT, that generates 0.10 ETH in earnings. All that’s required is a Web3 wallet, a small amount of ETH on Optimism to publish as an NFT and some good article ideas.

Mirror has generated just over 575 ETH ($904,202) for writers on its platform, in just over a year since launching the writing NFT feature!

Source: Dune

For video content creators, there’s Lenstube. Upload your videos and set a price for people to collect them as NFTs to earn MATIC (note you’ll need a Lens Protocol handle). Even if you don’t have a Lens account yet, there are other platforms like DLive and LBRY where video makers can earn crypto.

If you’re creatively minded, then there’s no limit to what you can do to earn some crypto! It’s not just writers and video makers who are benefiting from the rise of Web3 platforms. Musicians and photographers can also turn to NFTs to get paid for their work. The only drawback of this method is that you’ll need an existing audience or fan base to earn a decent amount.

If content creation isn’t your thing and you prefer to consume content, then the good news is that you can also earn small amounts of BTC by using the Fountain app. Listen to podcasts for an hour each day to start acquiring some sats!

4. Learn-to-Earn 🏫

Learn-to-Earn platforms are a quick and easy way to earn small amounts of crypto. For example, you can get $20 in OP by completing quizzes through Coinbase’s mobile wallet (note you need to set up a Coinbase account and complete KYC to be eligible).

As well as learn-to-earn platforms, you can also embark on quests on platforms like Galxe (filter by reward type and then select “Token Reward”), Layer3, Questn and RabbitHole to earn some tokens by completing tasks and quizzes. Many of the opportunities offer XP or points to level up and unlock more quests to complete, but you can win prizes through lucky draws for doing some of them.

5. Airdrops 🪂

Airdrops are one of the best ways to earn crypto with very little effort and are a very effective way of accumulating an upcoming token at the minimal cost basis.

There’s great earning potential for airdrops, as you may be eligible to claim thousands of dollars worth of tokens (although some airdrops may be worth much less).

Earn newly launched cryptos through interacting with testnets before new chains or projects launch, or interact with tokenless protocols to earn a future allocation (in which case there is a cost involved, such as gas or using your own funds).

For more details about airdrop hunting, check out our playbook👇

https://perpprotocol.mirror.xyz/T163bpmMtv_li2tb8HCArhvAoEb9YkZ5rEJIN6CzHEQ

6. Cashback Programs 💸

Are you a big spender? If so, cashback programs might be a good way for you to add to your crypto holdings. All you need to do is switch up your spending habits to earn some crypto through cashback programs.

BitRefill offers cryptocurrency users in 170 countries up to 10% cashback in BTC when purchasing gift cards from a variety of retailers. Here’s one idea of how you can start earning crypto without adjusting your budget: Instead of using cash or fiat to purchase your groceries, buy a gift card for your favorite retailer using a variety of cryptos (such as BTC, ETH or USDC) via BitRefill.

Let’s say we’re going to do some weekly shopping at Marks & Spencer in the UK and buy a £100 gift card. Since this retailer offers a 1% cashback rate, you’ll earn £1 in BTC for every £100 spent.

After purchasing the gift card, you can replace the crypto you spent with the money you’d normally use to buy groceries and earn cashback rewards to add to your digital currency stack!

And it’s not just groceries you can use this technique for. Cashback can also be earned from Starbucks, electronics goods retailers and many more stores. Note that more BTC can be earned by purchasing higher-priced items using gift cards.

As well as BitRefill, you can also earn crypto in similar ways:

• Use the Lolli browser extension. Although it’s only available for US merchants at the moment, you may be able to earn rewards when making purchases from an American website (e.g., Booking.com). More merchants and coverage for other locations will be expanded in the near future.

• Take advantage of other cashback programs such as the Fold app and satsback.com.

• Book flights and hotels via Travala.com. Travelers can earn the project’s AVA token when making purchases through their website.

Finally, cryptocurrency credit cards provide yet another method to earn tokens passively whenever you spend (a good comparison can be found here).

7. Referral Programs 🗣️

Another passive income strategy to consider is the various referral programs on offer by a range of different cryptocurrency companies.

Most exchanges and P2P marketplaces (e.g., LocalCoinSwap and Noones) have a referral program where you can generate income from a personalized link that can be shared with others to sign up to the platform and trade. Referral programs are popular across the entire crypto ecosystem, with the potential to earn through referrals to hardware wallets such as Keystone and Trezor.

The earnings you can generate depends on how large of a network you have and how deeply they are involved in crypto. If you’ve got an extensive network of friends that are just getting started in crypto or you know a lot of high-volume traders, then this is a good option to earn some rewards with very little effort.

8. Play-to-Earn 🎮

If you’re excited about gaming on the blockchain, this is another way to earn crypto. While you have to buy some of the game’s NFTs to take part, if you are a good gamer and can dedicate enough time, then making money from the ‘GameFi’ narrative is possible.

The list below details some of the most popular play-to-earn blockchain games:

• The Sandbox: design your own in-game assets using the VoxEdit tool and sell them as NFTs through Sandbox’s marketplace. You can also create and monetize your own 3D games using the Game Maker tool. Neither of these options requires you to be a coding expert and both tools are free to use!

• Gods Unchained: a virtual trading card game where you can earn tokens by participating in tournaments.

• Axie Infinity: to get started, you’ll have to purchase at least 3 Axies, which can earn you SLP through battling and playing the game. It is also possible to breed Axies and sell the offspring on the project’s native marketplace.

To discover other play-to-earn opportunities, familiarize yourself with platforms like DappRadar and NonFungible, as well as signing up with newsletters that offer the latest news and insights into GameFi, such as Metaversal.

9. Staking & Yield Generation 🧑‍🌾

Staking and yield generation is another great way to earn some crypto, although it requires some initial capital to get started. The potential rewards can be high depending on the option you choose. It’s recommended to visit platforms like DeFiLlama and stable.fish to seek the highest yielding opportunities.

Some methods you can use to grow your crypto holdings include:

• Staking ETH in a crypto wallet such as Argent to earn up to 4% APR. Omni is another great crypto wallet with a slick user interface that allows you to stake various assets, including ETH, MATIC and SOL.

• Lazy River staking: earn a sustainable, double-digit yield in USDC and vePERP based on actual market activity by locking PERP into vePERP. The trading fees generated by DEX traders are shared with vePERP holders every week, who collectively earn 15% of the fees.

Sign up for our Hot Tub vaults to earn a sustainable yield in WETH or USDC effortlessly from an automated arbitrage strategy.

10. Be Active on Reddit to Earn Donuts and Moons 🍩 🌝

As part of the community points initiative on the popular social platform Reddit, engaged users of two cryptocurrency-related subreddits can earn the Donuts and Moons tokens.

In May 2020, Reddit introduced an ERC-20 token called Moons, which is now deployed on Arbitrum Nova, as a way to reward the contributions of r/CryptoCurrency subscribers (such as sharing good content or leaving useful comments). Moons can be earned by sharing good content, leaving useful comments, as well as participation in competitions such as community trivia, cointest and prediction tournaments.

Meme masters can also earn up to 350 Moons if they manage to rank in the top 5 meme posts in r/CryptoCurrencyMemes in terms of upvotes at the end of each month.

Being active in the r/CryptoCurrency subreddit is not the only way you can earn some tokens for your contributions. Members of r/ethtrader can also earn another ERC-20 token on mainnet and Gnosis chain known as Donuts. Donuts are distributed every 4 weeks automatically, based on your contributions to r/ethtrader and accumulated karma from this subreddit.

By engaging in the strategies outlined above, such as airdrop hunting, cashback programs and yield generation, you can diversify your crypto income. Remember to research each opportunity thoroughly, assess the risks and rewards, and stay informed about the latest trends and developments in this rapidly evolving market.

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What is Yield+?

Yield+ is a new feature that allows traders to save time and effort by doing two things at once:

• earn yield with a single asset and also

• use the same asset as margin to trade perpetual futures.

Along with Perp’s multi-collateral feature, Yield+ unlocks greater flexibility for traders and yield seekers.

By taking advantage of the composability of DeFi, we have built Yield+ on top of Yearn’s managed vaults on Optimism so traders can earn interest on their USDC, USDT or ETH and use their farming positions as margin to trade crypto with leverage.

When depositing to Yield+, you’ll receive some yield-bearing tokens in return. These yield-bearing tokens can then be used as margin to open positions in any of the 18 crypto markets available on Perp.

Even when your collateral is idle, you’ll continue to earn a return from Yearn’s vault strategy. As a result, you don’t have to worry about moving your tokens around when you have no open positions or trading ideas!

The benefits of Yield+ include:

• Earn interest while you trade: Unlock flexible crypto trading with yield-bearing assets.

• Sustainable APR with no fees: Earn up to 6% APR from a sustainable strategy.

• Open to all: Yield accessible to all with no whitelist requirement.

• Low risk: Yield+ builds on top of Yearn’s battle tested vaults, there’s a very low likelihood of losing your funds since the only risk relates to smart contract exploits.

• Share price only goes up: Benefit from a share price that is perpetually in ‘number go up’ mode.

• Instant withdrawal with no lock time: Freedom to deposit or withdraw your tokens whenever you want.

Make your crypto go further and unlock flexible trading with Yield+. Be one of the first to supercharge your trading collateral by signing up to the waitlist now.

FAQs

• Is there a minimum deposit?

No, there is no minimum deposit.

• Is there a cap for Yield+?

Yes, there is going to be both a global cap and an individual cap as it can be used as collateral. The individual cap will be flexible and may change over time.

• What is the risk of Yield+?

The only risk relates to smart contract exploits. If there’s a bug or exploit in Yearn’s vaults on Optimism, then this impacts Yield+ users.

• Where does the yield come from?

Yearn’s managed vaults on Optimism.

• Is the LP token transferrable?

No, it can only be used as collateral to trade on Perp.

• What’s the collateral ratio for LP token?

The collateral ratio will be determined at a later date, but will start low (~50%). ** **

If you have any questions about Yield+, contact us and chat with us on Discord using the link below!

Links

• Website

• Twitter

• Discord

• Youtube

That’s why we’re introducing Smart Maker as a beta feature to improve execution prices and reduce slippage when opening large positions.  While the benefits of this new feature should attract more traders who want to trade with size, it also has the potential to increase the fee revenue for LPs as a result.

Read on to learn more!

What is Smart Maker?

Smart Maker utilizes Over-the-Counter (OTC) trades to deepen liquidity across 4 of the most popular markets on Perp: BTC, ETH, OP and PERP. Prior to introducing this feature, you’d see the position’s entry price, price impact and trading fee at the bottom of the order panel when entering your order size.

Following the launch of Smart Maker, the user interface remains exactly the same. However, traders will also notice that when selecting a direction and inputting a position size, a notification appears above the “Confirm Long”/“Confirm Short” button to inform you when you can get a better price for your order.

The notification also includes a percentage that indicates the difference in execution prices. If a more favorable price cannot be found via Smart Maker, then the order submission process remains exactly the same as what you’re already used to.

How Does Smart Maker Benefit Traders?

The major change is that if there’s not enough liquidity in a certain market’s Uniswap v3 pool when trying to open a large position, then Smart Maker will offer a better execution price and lower slippage.

Let’s say a trader wants to place a large order in the OP market. If the liquidity available in the pool causes too much slippage, then the order is automatically handled via Smart Maker.

What happens then is that a single transaction provides liquidity for the trader in a certain range and executes the order on their behalf. This particular form of liquidity provision is known as Just-in-Time (JIT) liquidity. Given that additional liquidity is added to the pool through JIT and then immediately taken by the trader, they end up with much lower price slippage as well as a better execution price.

Note that users cannot opt out of Smart Maker. If the market’s pool has enough depth for a large order, then an order will be executed as it usually is. However, if the pool’s liquidity is not deep enough to provide favorable execution prices or prevent large slippage, then these orders are automatically submitted via Smart Maker.

Some other advantages for traders include:

• No gas fees: compared to building or unwinding positions over multiple trades, orders executed through Smart Maker will not need to pay gas.

• Faster execution: A quicker alternative to time-weighted average price orders (or similar methods) for building large positions.

• Non-custodial: trades occur on-chain just like they usually would on our DEX.

Keep in mind that the execution is slower as compared to market trades and the feature will not be available for every market on Perp following the launch. But the trader experience will improve significantly, as the difference in slippage for large orders on Perp and centralized exchanges becomes a lot less noticeable.

FAQs

• How can I as a trader take advantage of Smart Maker?

There will not be any change to the UI, so you can submit orders as you usually would. However, to activate Smart Maker, a one-time approval transaction must be executed. Once approved, you can then begin to benefit from improved execution prices and lower slippage for larger orders!

Remember, Smart Maker only applies if a better price can be found using this method, otherwise your order will be executed as normal using the available liquidity in the market’s Uniswap v3 pool.

• Will Smart Maker have any limits?

Each order amount must be between 500,000 USD or lower. There’s also a dynamic limit, where the fulfilment of an order depends on overall market liquidity.

There is no status limit for per-period volume. No matter what the order size or per-period volume is, it will be limited by the buying power of the SmartMaker dynamically.

There’s a per-market limit, with the maximum size of a each order amount for supported markets: ETH: 200K USD, BTC: 100K USD, PERP: 40K USD, and OP: 40K USD.

• Isn’t JIT an economic attack or similar to negative MEV?

No, it isn’t accurate to call it an attack or compare it to negative MEV, since JIT liquidity provision results in better prices for traders. With lower slippage attracts more traders and creates a positive feedback loop for the entire Perp ecosystem.

• Which markets will Smart Maker be available for?

During the initial testing stage, orders will be submitted via Smart Maker for the following 4 markets: BTC, ETH, OP and PERP. You should notice significantly improved execution prices and slippage when opening large positions (>100K USD) in these markets.

• Is Smart Maker going to be a permanent feature on Perp?

The initial release will be a beta feature as an experiment to see how Smart Maker improves the trader experience. Once Smart Maker is running smoothly and there's good performance, we’ll release another update in the near future to improve the trader experience even further.

• Will Smart Maker get liquidity mining rewards?

No, Smart Maker is designed to improve prices execution and slippage. It doesn’t earn any liquidity mining rewards.

If you have any other questions about Smart Maker, reach out on Discord using the link below!

Links

• Website

• Twitter

• Discord

• Youtube

In this article, we summarize some highlights, exploring where we’re at with privacy in the Ethereum ecosystem, the state of DeFi and what the future may look like.

To kick off the event, Eleanor Blanc introduced Tornado Cash developer Alexey Pertsev to the stage, who is still fighting his case in the Netherlands, thanked CryptoCanal for their support and introduced his legal representative Keith Cheng to the stage.

Insight into the Tornado Cash Case in the Netherlands

Keith Chang’s talk was the first of ETHDam, explaining misconceptions of the justice system about Alexey’s case and Tornado Cash itself. Chang throughly debunked the misconceptions, such as:

• The intent behind Tornado Cash was to enable money laundering: in fact, it was created for privacy-preserving transactions and accommodates legitimate use cases, such as donating to charity.

• The developers had control over the protocol and could prevent deposits from criminal elements: this is in fact false as the contracts are immutable and the solutions recommended by the justice system on the user interface or smart contract level would only attract more criminals.

• Tornado Cash operated like a Bitcoin mixer: the main differences to Bitcoin mixers is that Tornado Cash is not meant for solely criminal use cases, is not controlled by a single entity and is not a centralized solution with one UI, one relayer and one withdrawal option. Also, Tornado Cash is not designed for money laundering because of its compliance tool.

• Pertsev had a central role in Tornado Cash: Prosecutors tried to put Alexey in the steering position and they wanted to punish someone because they cannot find the bad guys. In fact, Tornado Cash was a community effort since it was launched with a trusted setup ceremony with over 1,100 contributors and the history of the DAO shows active involvement of the community. Moreover, a significant portion of the project draws inspiration from ideas and prototypes of the Ethereum community: e.g., Vitalik Buterin’s blog post describing a minimal mixer design, the Semaphore project, and CircomLibrary (which Tornado Ccash utilized for zk-tech).

The talk concluded that Tornado Cash was put together by community for the community, and Alexey alone could not make such a big difference. The intention was protecting privacy and the compliance tool is the only thing that really works to discourage criminal use, which has been built in from the start.

Finally, Chang stated that they still have an ongoing trial and much more work to do on the defense.

Anyone interested in helping fund Alexey’s legal defense can do so at freealex.tokensoft.com.

Privacy First

A panel looking at privacy emphasized the need for better education in the ecosystem.

Here are a couple of key quotes from this talk:

• Parazyd (co-founder of DarkFi, an upcoming private by default blockchain) said that he was “concerned about Ethereum’s future: it might just become illegal to run an Ethereum node or everything gets censored. Kinda scary that there’s a chance everything could be banned and you become a criminal for using it.”

  “I want to remove this concept of identity on the blockchain - so that everything is anonymous.”

• Mykola Suisko from PrivacyNow, a think tank making privacy mainstream on an educational level, said there’s a need for wider collaboration:

  “If you ask people blindly, they say yes, they care about privacy. But they don’t use or promote these tools. We should collaborate with the EEF and NGOs fighting for privacy. Where is the academy for privacy, privacy 101 for this market? Alliances are coming but they are moving too slow. All privacy tools could allocate grants for tooling, but they should also do so for advocating.”

Why Privacy Matters

Ameen Soleimani presented on the history and current status Tornado Cash, as well as explaining why privacy matters. Starting with a bit of background around the privacy-preserving tool, Ameen emphasized that in the aftermath of the Tornado Cash sanctions, US citizens can no longer use Tornado Cash, only criminals, non-US citizens and authorized US government employees.

He also highlighted a paper on Tornado Cash from April 2023, published by the St. Louis Federal Reserve Bank and explored the trade-off between regulation and privacy. The paper noted that “crypto assets mixers such as TC may become an integral part of public blockchain infrastructure” and Soleimani said it’s the best paper he’s seen on Tornado Cash, which you can read for yourself below:

Tornado Cash and Blockchain Privacy: A Primer for Economists and Policymakers

This article explores non-custodial crypto asset mixers such as Tornado Cash. The authors analyze what types of mixers exist and how they work.

https://www.stlouisfed.org

The concept of privacy pools was also introduced, which addresses the critical flaw of Tornado Cash: users were unable to prove that they weren’t associated with North Korean hackers. With privacy pools, you are not forced to share the same anonymity set as with Tornado Cash. Ameen noted that v0 is not the final product, as data providers like Chainalysis are needed to do tracebacks on deposits, so users don’t have to manually create their own subset exclusion lists.

Ameen Soleimani

@ameensol

1/ We fixed @tornadocash

v0 of privacypools.com is live on @optimismFND

test out the demo, but please note:
- this is experimental code
- it has not been audited
- the trusted setup is untrusted

read the full story anon

x.com/ameensol/statu…

privacypools.com

Privacy Pools

Privacy Pools by 0xbow is a compliant way to anonymously transact on Ethereum. 0xbow blocks illicit actors to ensure pool integrity.

Ameen Soleimani

@ameensol

I sincerely hope no one thought we were finished

2,408

12:18 PM • Mar 4, 2023

To allow privacy pools to flourish, there are several key strides being made:

• MolochDAO is planning to sponsor a follow-up grant for additional feature development.

• Collaboration between Ameen, Vitalik, a Chainalysis representative and Fabian Schar (the author of the St. Louis Federal Reserve Bank paper on Tornado Cash) to write a new paper covering privacy pools.

• And meetings with OFAC to explain how privacy pools work.

Not getting sanctioned is the hard part, rather than actually writing the code though. Because of this, Ameen says that privacy pools need deep integration with data analytics firms to build APIs that regulated entities can consume, such as Coinbase, which can check that a user depositing funds properly excluded illicit funds at the time of their withdrawal.

The last part of the presentation gave us a look at what we can expect in the near future. The folks Chainway are developing a v1 of privacy pools, and then the plan is to add shielded transactions for a recursive proof-of-innocence.

Such a privacy tool would open up privacy-preserving payments to causes such as IranUnchained.com (a NGO/DAO to help Iranians inside of Iran) without being listed by the US government as a terrorist. Privacy pools would be ideal for this if widely used, as exchanges wouldn’t know the source of funds but they would know it isn’t associated with criminals or terrorists.

The Next Wave of Privacy Products

A presentation hosted by the co-founders of RAILGUN DAO (Alan Scott and John Meurer Jr.) gave the audience an introduction to Railgun.

Railgun Intro

Railgun is effectively a suite of smart contracts that live all on chain, which acts like a private wallet so you can send tokens to people, speculate on NFT swapping, earn yield, and so on. The wallet was deployed about a year ago on Ethereum, Polygon Binance Smart Chain, and Arbitrum more recently, and they've seen collectively about $300 million in volume in their first year.

However, one limitation at the moment is the intensive gas costs, with one side of a Railgun transaction potentially exceeding 1 million gas. But the co-founders mentioned that they are making some progress on this, with a focus on cost savings for the next six months to bring this more in line with a public transfer. The new cryptographic model behind the setup of EIP-4844 (namely KZG commitments) is also being used by Railgun, which is anticipated to bring the gas costs of private transactions down by 5x.

Proof of Innocence: Moving Away from KYC

The co-founders also mentioned that Chainway, the creators of the first Proof-of-Innocence system for Tornado Cash that launched a few months ago, have received a grant to bring this system to Railgun.

We can expect to see a demo ready version in the next couple of months and by Autumn, a production version will become available for people to use. With such a tool, we can also move away from intermediaries that control KYC and instead rely on “moon math” to prove innocence.

Railgun Cookbook

While the privacy of end users is one concern for Railgun, another relates to influencing developers to think about including more privacy into their applications. To help developers build privacy into their applications, Railgun released a new project recently known as the Railgun Cookbook.

The cookbook provides recipes to break down into the process of building privacy into a Dapp into bite-sized pieces. The co-founders said that hopefully this helps lower that barrier for entry for people to take and add this to the things that they're doing in the ecosystem.

State of DeFi 2023 report

The CEO of oasis.app Chris Bradbury presented the State of DeFi Report 2023, which gathered responses from 330 survey participants.

Some of the key findings were:

• Over a third of crypto natives have over 85% of their total wealth in crypto.

• DeFi users care most about security, control and trust.

• Twitter, personal networks and word of mouth are key to user awareness in DeFi.

• Unclear risks, the ability to trust underlying protocols and timing of the market/price action are the main adoption barriers.

• To build user confidence, protocols should allow users experimenting with a small amount first, produce educational content and display the real-time activity of others.

• Chris also presented a “cheat sheet” for what the industry’s current focus should be:

There are over 100 insights in the full report, which can be downloaded here.

Security in DeFi: Best Practices, Challenges, and the Road Ahead

A panel on security provided some interesting insights into the biggest security threats for the ecosystem at the moment.

Here, we summarise some thoughts from the panel members:

Kiril Ivanov co-founder and tech lead of DeFi insurance aggregator Bright Union:

• “We see the great evolution of the security tools for developers. There been so many told over the past day here. Even so, there are many tools which help you to make much more secure code, so it's improving. However, there are new techniques also appearing.”

• “So there are cross-chain bridges, there are cross-chain liquidity, there are new types of oracles, and so on. So I'm afraid that what we see is that the security tools are improving, but the new features, new ideas appearing much faster.”

“Even so, we're never going to catch up with the new methodologies, new tools, et cetera. So the risk always will be there and the next big thing or big risk is unknown yet.”

• Evert Kors, co-founder of Sherlock:

  • “I think if you look historically like 2017, all the hacks were very simple checks that could have been mitigated. I think if you look at it that way, we have made good progress because right now, most of the hacks are more complex and more complicated, where you use cross train protocol reentrancy and those complex attacks. So I think that's a good trend that the exploits are getting more complex.”

  • “But yeah, of course you don't want any exploits to happen, but I expect the space to get better at catching these exploits and then maybe there is some endgame where we've figured out all the complexity, but as Karill said, developers like to get more complex as well. So it's a game of playing catch up, mostly.”

• Ricky Tan, Head of BD at Nexus Mutual:

  • “I think one of the biggest risk right now is almost basically a human aspect to the industry where we're basically going through we've had a big market correction. Luckily, a lot of the junk has been washed out, the bad actors are gone.”

  • “But at the same time, because we're going through a bit of a low, I think a lot of teams are at the risk of basically lowering their guards because they might not be reviewing their older code that much.”

  • “And I have this sense that right now you'll see this wave of very targeted attacks like on older parts of the DeFI world where people were like, oh, that's actually a very simple hack.”

• Harry Kikstra, COO of Ease DeFi:

  • “We found quite several of them in older code which are either still active or forked by other protocols, which is another risk that people just blindly fork protocols and not check back.”

“DAO hacks: I think that's a big risk. Coming up, some of these DAOs that control a lot of money are sometimes controlled by one or two wallets. And even if you trust the two people who are in control of those wallets, they can still be hacked, socially engineered and what have you, or just do a rogue vote like what happened last night. So I think that's a big risk factor.”

L2s are not the Future of Blockchain Scaling

Justin Bons, founder of Cyber Capital, gave a somewhat controversial talk, arguing that L2s are not the future of blockchain scaling. In his view, L2 scaling is the wrong path for Ethereum to go towards and thought that execution sharding is the way to go for the roadmap.

Bons pointed to the largest layer 2s (L2s), which all have admin keys, which he says goes against the ethos of crypto, and they all hold billions of dollars in TVL. There are also the issues of the user experience, fragmentation of liquidity and the diversion of funds away from layer 1 development to L2s.

He also emphasized that there was no debate about the shift to L2 scaling:

“A year ago there wasn't a giant debate about this pivot it just sort of happened and the narratives just shifted over time by the influences, by the leaders, so to speak.”

However, it wasn’t all doom and gloom for L2s, as Justin stated:

“I do think there are use cases for L2s. I think decent size exchanges which require high volume. I think potentially things like streaming services where you have a relationship with a single service in which you can say, load your capital into. I think there are multiple applications where layer 2s make sense, but as a replacement for L1 scaling, I think it's a flawed approach. I think that's an important distinction to create.”

However, Justin thinks that competitor layer 1s could benefit since…

“The UX is so much better, just because it maintains composability and interoperability. I think this is very important from the perspective of a user. I think as developers, it's very easy to forget what it's like for a normal person to use cryptocurrency.”

For a more optimistic view of L2s, check out the panel with builders from OP Labs, Scroll, Astria, and KasarLabs:

The Future of Privacy

Sirenko from LunarDAO, Lefteris Karaptsas (founder of Rokti), Adam Gagol from Aleph Zero, and Kieran Mesquita (a RAILGUN DAO contributor) provided the audience with their opinions on the future of privacy.

While the consensus is that people generally don’t care about privacy, Adam argued that people do care, since by far the most popular “privacy solution” they use is to send transfers from centralized exchanges.

“The problem is that the current privacy, the actual privacy protocols are really hard to use. You need to download a lot of data from the chain to actually even be able to make a transaction. You need to compute some expensive proof on your machine. It takes longer time, it takes way more space, and you need to synchronize with blockchain every time you kind of log in.”

Lefteris mentioned that privacy is something that every developer should work on as “the current state of privacy in crypto is a mess. People don't think about privacy at all. I believe we have some tools, they are being criminalized and hunted.”

“I think that the biggest thing that we have to fight for is user education and explaining that privacy is not a given and that just by using crypto, it's like you are showing your entire transaction history to everybody in the world.”

Sirenko added to this, saying, “Not only education on being experts, but education on understanding generally what we are doing. I think crypto is the privacy problem is just like a part of general problem and the problem is that crypto is by large becoming corrupted. We more and more trying as an industry being just like a copy of TradFi.”

“Education needs to be also on a site of understanding why is crypto out there and in which things is actually distinct different from the TradFi. We should be a better alternative to TradFi and I think that understanding is missing as well as what full privacy stack means.”

On the future of privacy, Adam stated that there are hard cryptographic problems to solve and hopes to see smart applications that enable private transactions.

Kieran from Railgun noted that there’s no full stack privacy at the moment and admitted it is a failure on part of builders in the space:

“Okay, sure, maybe someone uses a private wallet, but that's useless. If they go and use some accounting software that just tracks all of their wallet data and sells that off, the fact that they're using a private wallet is useless. I think we need to do better as builders to work together to enable all of these individual solutions that we're building to kind of work more harmoniously.”

As well as the talks, there were a bunch of hands-on workshops by projects, such as Dune Analytics showing attendees how to analyze different types of data, Railgun on how to create a private vault using Beefy.fi as an example, and Nym, which walked through how to preserve your privacy as an Ethereum validator. All the videos of the talks and workshops are available on CryptoCanal’s YouTube channel.

Links

• Website

• Twitter

• Discord

• Youtube

In what follows, we’ll describe a simple outline of how money markets in DeFi work. Lenders supply their crypto-assets to a pool and earn interest income from borrowers. In return for their deposits into lending pools, lenders receive a token that represents a claim on the asset supplied, which is then burned when a lender wants to reclaim their funds.

Tokens supplied to the lending pool can be utilized by borrowers and to incentivize them to repay the loan, they must deposit some crypto-assets as collateral. Once the loan is repaid, the borrower can then reclaim their collateral.

However, if a borrower fails to repay their loan and the value of their collateral decreases, they may face liquidation. Usually, another user can liquidate part of the loan to earn a discounted amount of tokens. As a result, borrowers need to ensure over-collateralization of their borrow positions to avoid being liquidated.

Benefits and Risks of DeFi Money Markets

Money markets in DeFi offer many benefits over traditional finance. First, there’s no need to hand over any sensitive personal information. To take part, all you need is:

1. A Web3 wallet,

2. Some crypto-assets as collateral, and

3. An internet connection.

Secondly, DeFi money markets are also more inclusive and permissionless. In the world of traditional finance, entrepreneurs often have difficulty obtaining funding and individuals with no credit scores are denied access to capital. But this is not the case for on-chain lending protocols, since anyone can borrow from these money markets given they have the three things listed above.

Some other benefits of money market protocols in DeFi are:

• On-chain smart contracts determine the parameters of a loan, so there’s no scope for discrimination against borrowers.

• Lenders receive granular interest payments denominated in crypto-assets based on supply and demand. In traditional financial markets, interest rate changes are often not passed on to their customers. For instance, if the supply of loanable funds increases, this should translate into a low rate of interest for borrowers. However, lending firms may not facilitate lower borrowing rates to maximize their profits.

• The ability to use crypto-assets as collateral and retain exposure to their price while also borrowing funds (e.g., for an unexpected emergency).

• Because of the composability of DeFi money markets, other interesting applications can be built on top of lending protocols. For example, PoolTogether uses Aave’s lending protocol as a building block to offer a no-loss lottery. The yield generated by supplying funds to Aave’s USDC lending pool is used to award PoolTogether users USDC prizes every day.

While DeFi money markets offer many advantages over traditional finance, there are also some risks to be aware of:

• Lending in DeFi is over-collateralized, which means you can only borrow a fraction of the collateral amount. As a result, there’s a risk you could lose the deposited assets if the value of your collateral drops sharply in relation to the value of your loan. For example, when depositing ETH as collateral and borrowing DAI, a large drop in the price of ETH exposes your position to liquidation. Each protocol has their own parameters for the maximum permitted loan-to-value ratio (LTV) and if you exceed this maximum, then you can potentially lose the assets deposited.

• As with any DeFi protocol, there are smart contract risks. Always DYOR! Closely examine a money market’s audit reports, stick with the projects that have an established community and a long track record.

• Lending pools can become over- or under-utilized, depending on the balance between the demand for and the supply of loanable funds. If a lending pool is over-utilized, that means borrowers have exhausted almost all the funds deposited into the pool by lenders, meaning new users cannot borrow or redeem. On the flip side, under-utilized lending pools result in reduced yield for lenders, as there are funds in the pool but there’s very little borrowing demand.

Examples of DeFi Money Markets

In the following sections, we’ll introduce you to the most popular and innovative money market protocols.

Aave

Aave is the most dominant lending protocol by total value locked (TVL) with over $5 billion, being the third largest DeFi application by this measure. The leading DeFi money market is available across 8 different chains, such as Ethereum, Optimism, and Polygon. Initially launched in May 2017 as ETHLend with a peer-to-peer lending model, the architecture was revamped to a peer-to-contract model and the protocol relaunched under the name of Aave in early 2020.

In January 2023, Aave V3 was launched which introduced lower gas fees, isolated and siloed modes, supply and borrow caps for enhanced security (to combat price oracle manipulations), as well as efficiency mode, among many other features.

Isolated borrowing enables assets with less liquidity to be used as collateral, placing a debt ceiling on specific collaterals and only allowing loans denominated in stablecoin. The idea behind isolated borrowing is to prevent the collapse of one low-grade collateral from affecting the overall solvency of the Aave.

Efficiency mode (also known as ‘E-Mode’) can be activated through an on-chain transaction and allows your LTV for a selected category of assets to be increased to 97%. However, if E-Mode isn’t activated, users can only borrow up to 80% of their collateral value.

When depositing to Aave’s lending pools, lenders receive aTokens. For example, when lending USDC, you’ll receive a transferable token called aUSDC. As yield-bearing tokens, aTokens entitle the holder to their initial deposit and any interest or rewards earned.

If a lender wants to remove their assets from a pool, the aTokens are burned and the lender receives their original deposit back plus any interest and their share of flash loan fees (collectively, lenders earn 0.09% of the flash loan volume).

Source: Aave Docs

As another feature of Aave specifically designed for developers, flash loans can be created by building a contract that essentially borrows any available amount of assets without the need to put up any collateral, with the requirement being that the liquidity is returned to the protocol within a one block transaction.

The contract built by a developer needs to execute the instructed steps and pay back the loan, interest and fees, all within the same transaction. Interested readers can learn more about flash loans here. Non-developers can also use flash loans through no-code platforms, such as Furucombo.

When borrowing crypto-assets through Aave, users can select between stable or variable interest rates (where the latter fluctuates depending on the amount of liquidity in the reserve). They’ll also earn yield on their supplied collateral, but usually the APY for borrowing assets outweighs this.

If the value of the collateral for a loan on Aave drops below a certain LTV, the protocol automatically repays part of the loan through liquidation. Up to 50% of the pledged collateral can be used to repay the loan and bring the LTV back within the limits of the loan agreement. Liquidations are processed by "liquidators”, which are users that can repay the loan and claim the collateral (plus a 5% bonus).

To add more security to the protocol, the project’s native AAVE token and the LP token for Balancer’s AAVE-ETH pool (BPT) can be staked on Ethereum’s mainnet to earn safety incentives (i.e., more AAVE tokens). The staking module is a backstop in case the protocol experiences a shortfall event. Another benefit for AAVE stakers: a discount on the borrow rate for the upcoming decentralized stablecoin GHO.

While AAVE stakers can earn an estimated 6.10% APR at the time of writing, they take on the risk of slashing. Of the total amount of staked tokens, up to 30% may be used to backstop the protocol in the event of a shortfall. Another factor to consider is a 20-day cooldown period when unstaking AAVE.

As well as staking, the AAVE token and its staked version are also used in governance, specifically for launching proposals and voting on Aave Improvement Proposals. Therefore, tokenholders have a direct say in how the protocol operates, such as decisions on which assets can be added as collateral, launching the protocol on new chains and adjusting risk parameters, such as borrow or supply caps.

Compound Finance

Alongside Aave, Compound Finance is another leader in the DeFi money markets that currently has a TVL of $1.8 billion and is deployed across 3 different chains: Arbitrum, Ethereum, and Polygon. Compound was launched in September 2018, while a second version was released in May 2019 and, following a governance proposal, a third version (known as ‘Comet’) was deployed in August 2022.

With the launch of Comet, Compound shifted away from a pooled risk model where any asset can be borrowed. Unlike Aave and other popular money markets, Compound’s third release only enables its users to borrow USDC, although a range of assets can be used as collateral (such as ETH, WBTC or LINK). The liquidation engine was also redesigned to focus on security and to make the protocol more borrower friendly.

Source: Instadapp

Lenders who deposit assets into the protocol’s smart contract receive cTokens (similar to Aave’s aTokens). For example, if you deposit USDC to Compound v2’s lending pools, you’ll receive an interest-bearing cUSDC in return, which can be exchanged for the deposited USDC and any interest earned.

However, for Comet other assets that are accepted as collateral do not earn interest payments, so lenders cannot earn yield on assets other than USDC. The flipside is that there are fewer risks taken on by the protocol. For example, illiquidity risk is avoided since if a lender supplies ETH as collateral, they truly own their supplied assets, as borrowers can only utilize USDC for loans.

There’s also a minimum borrow amount (preventing the protocol from owning a small amount of under-collateralized debt that’s too expensive to liquidate) and supply caps to improve safety as compared to earlier versions.

Collateral factors on Compound vary depending on the asset supplied, ranging from 65% for the project’s native COMP token all the way up to 82.5% for ETH. Compound v3 introduces the liquidation collateral factor, which introduces a gap between the maximum collateral factor and the point of liquidation.

For example, while the collateral factor is 82.5% for ETH, the borrower will only be liquidated if their LTV reaches 90%, ensuring a buffer and allowing such a user to hold on to their positions for longer.

The liquidation system for Comet/Compound III also differs from previous versions of the protocol and other money markets like Aave since undercollateralized accounts are absorbed by the protocol, instead of by liquidators. In Comet, borrowers are repaid using the protocol’s reserves. The benefit of this system is that it allows the protocol to avoid bad debt at times where there is little incentive for liquidators to perform liquidations.

Source: Instadapp

Like AAVE, COMP can be used in governance to contribute to the future direction of the protocol and can also be earned by depositors and borrowers. As well as being an ERC-20 token, COMP holders can also delegate their voting rights to other addresses. Any address with at least 1% of the COMP supply can propose new governance actions.

FraxLend

The third and final DeFi money market we’ll cover is FraxLend, which was launched in September 2022 by Frax Finance to complement their ecosystem and drive more demand for the FRAX stablecoin.

At the time of writing, FraxLend is the 8th largest lending protocol by TVL with just over $155 million in assets and is only available on Ethereum’s mainnet. Currently, the FRAX stablecoin can be borrowed against 8 different ERC-20s as collateral, including WETH, WBTC and the project’s native governance token FXS. The maximum LTV is 75% for all pairs, except for FRAX-FPI, which has a maximum LTV of 95%.

Each lending pair is an isolated market so that anyone can participate in lending and borrowing activities. The isolated pairs also means liquidity providers can clearly assess the risk because the amount of variables is contained. There’s also reduced risk as compared to a pooled model from a development bug perspective.

Borrowers can deposit their selected ERC-20 token as collateral (say WETH) and borrow FRAX, paying an interest rate to the lenders. If a borrower exceeds their maximum LTV, then they risk their borrowing position being closed by a liquidator.

Similar to Aave’s aTokens, when a deposit is made into a FraxLend pair, a user receives yield-bearing fTokens. As a lender earns interest payments, these fTokens can be redeemed for a greater amount of the deposited asset. The diagram below shows how FraxLend functions from the perspective of different participants.

Source: Frax Finance

To combat bad debt, FraxLend implements something called dynamic debt restructuring. In the event of extreme volatility, liquidators can repay the maximum amount of the borrower's position covered by the borrower's collateral and the remaining debt is reduced from the total claims that all lenders have on underlying capital. This mechanism helps the lender of last resort to avoid holding worthless fTokens and ensures a lending pair is resilient after adverse events.

One of the unique aspects of FraxLend is how interest rates are calculated. While interest rates are usually based on a pool’s utilization (the linear rate), for FraxLend, there’s also a time-weighted variable rate calculator (which was inspired by SushiSwap’s Kashi). Essentially, the interest rate is adjusted in perpetuity as a basis of utilization and means that the market ultimately decides what the proper interest rate curve looks like. The idea behind the time-weighted variable rate is that the pool deployer doesn't have to make an assessment of what they believe the proper interest rate curve is.

Unlike Aave and Compound, FraxLend is just one part of the Frax trinity, with the other two being stablecoins (notably FRAX and frxETH), as well as liquidity systems such as FraxSwap and FraxFerry.

In the near future, Frax’s money market is going to be deployed on Layer 2s such as Arbitrum, which will boost the liquidity of its stablecoin products, and begin to support Curve LP positions as collateral. Another update on the horizon to watch out for is a new DeFi primitive known as BAMM (Borrowed AMM), which can enable support for long-tail assets on FraxLend without the requirement of a price oracle.

Combining DeFi Money Markets with Perpetuals

DeFi money markets can be used for many reasons, such as earning interest and token incentives or enabling leveraged exposure through a folding strategy. Another potential use case is to borrow against an asset you don’t want to sell and think will appreciate in the future to go long or short another asset using perpetual futures.

Let’s say you hold 100 AAVE and you’re bullish on the token’s price. But you’re also bullish on OP and currently have zero exposure to this asset. However, you don’t want to sell AAVE to free up some funds to buy OP, as you may have to buy AAVE back at a higher price if the token appreciates in value.

In this case, 100 AAVE can be deposited into a lending protocol, borrow some USDC against it and then visit Perp and go long on OP-USD using USDC as collateral. You don’t have to sell your AAVE tokens and give up any gains, while also capitalizing on a potentially strong upward move in OP.

Once you’ve made some profits from the OP long, the perpetual swap position can be closed and the USDC that was borrowed can be repaid to get your AAVE tokens back. You’ll also still have some USDC left over, roughly equal to the profit made from the long OP trade.

However, there’s a risk that your trade doesn’t go to plan, where you’ll end up with a loss and cannot pay back the entire debt to retrieve all of your AAVE tokens. Make sure your LTV is not too high, as your supplied tokens could be liquidated if the debt isn’t repaid when the LTV reaches the liquidation point.

For example, if 100 AAVE is worth $8,000, and you’ve borrowed $4,000 in USDC to go long on OP, then your LTV equals 50%. But if the price of the AAVE token falls 33%, then you’d risk facing liquidation.

It’s recommended to keep your LTV as low as possible, so in the event of an extreme market downturn, the value of your collateral is more than enough to ensure your assets do not get liquidated and you’ll still have the flexibility to pay back the loan when you can.

Money Markets of the Future

DeFi lending protocols like the ones mentioned above are the money markets of the future, allowing anyone to easily access borrowing and lending services without any restrictions.

This article has briefly covered Aave, Compound and FraxLend, but there are many other DeFi projects in this space doing innovative things. For example, Alchemix allows cryptocurrency users to take out self-repaying loans, Liquity enables ETH holders to obtain interest-free loans on their holdings and the rise of NFTs has spawned numerous lending protocols for these non-fungible assets.

There’s no doubt we’ll see more innovation in the area of DeFi lending as time goes on, and as these protocols become more battle-hardened, they are set for greater adoption in the near future.

Links

• Website

• Twitter

• Discord

• Youtube

Following the approval of the Token House delegates earlier this year in March, the highly anticipated Bedrock upgrade was set in motion. Bedrock will be activated on Tuesday, June 6th 2023 (starting at 16:00 UTC) as the first ever release of the OP Stack!

The downtime for the Optimism chain is expected to last for approximately 2-4 hours, where the upgrade is expected to be completed by 20:00 UTC. All transactions on the Optimism mainnet will be halted for the duration of the upgrade. Once complete, everything should be identical to how it was before the upgrade, including all balances, contract addresses, transaction data, block data, and historical execution traces.

Some of the key changes included in Bedrock are:

• The target for block times becomes 2 seconds and multiple transactions can be included in a single rollup block. With the shift away from the ‘one transaction per block’ model, Optimism’s state growth is reduced by an estimated 15GB per year, making it less resource intensive to run a node.

• Optimism moves closer to ‘Ethereum equivalence’, introducing EIP-1559 (although the parameters are different and ETH is not burned as it is on mainnet), support for chain re-organizations and other features from Layer 1 (L1).

• Modularity: Bedrock enables support for multiple execution layer clients. Also, the proof system is abstracted, allowing a rollup to use either a fault proof or validity proof (i.e., zk-SNARKs) to prove correct execution of inputs on the rollup, paving the way for things like Cannon.

• Enhanced node performance by removing technical debt from the protocol and an update to the software to more efficiently query for transaction data from L1.

To dive even deeper into the changes brought about by Bedrock, we recommend reading the following article and watching our in-depth explainer video:

https://community.optimism.io/docs/developers/bedrock/explainer/#

How Does the Bedrock Upgrade Affect Traders on Perp?

Users will be unable to interact with Perp’s DEX, tokenomics page and vaults for 30 minutes prior to and following the Bedrock upgrade (between 15:30-20:30 UTC on June 6th).

• Starting June 6th at 15:30 UTC, Perp’s clearinghouse smart contract will be paused.

• As a result, users cannot deposit or withdraw, add or remove liquidity, or open and close positions during the downtime. The pausing of the clearinghouse contract also means that liquidations will not occur for the duration of the upgrade.

• Optimism’s sequencer will be wound down on June 6th at 16:00 UTC, so it will not be possible to bridge funds once the upgrade commences.

• However, funding payments are still calculated for the duration of the upgrade and limit orders remain functional. Following the completion of Bedrock, the keeper bot will come back online, and any limit orders submitted during the downtime may be filled at that moment.

• The Bedrock upgrade will initialize a new sequencer, so the bridging of funds will become available once the downtime has finished (expected between 18:00-20:00 UTC).

• Within 30 minutes following the completion of Bedrock, the clearinghouse contract will be unpaused after Perp foundation team members examine the relevant data. As a result, trading on the Perp DEX and the arbitrage strategy run by the Hot Tub vaults will return to normal operations. Also, the vePERP locker contract and claiming of Lazy River rewards will become accessible once more.

FAQs

• Do I need to close my positions?

No, it’s not necessary to close any existing positions, although you are free to close your positions prior to the upgrade before 15:30 UTC on June 6th. During the upgrade process, Perp’s clearinghouse smart contract will be paused, preventing any trading activity and liquidations for the entire duration of Optimism’s downtime. Since the network will not be operational between 16:00 and 20:00 UTC, liquidations are not possible.

Margin requirements and liquidations on Perp are based on the mark price. If there’s a large deviation between the index price and market price following a successful Bedrock upgrade, the mark price will be determined by the market price. As a result, there’s no risk of sudden liquidations when the Optimism chain comes back online.

• How can I prepare for the upgrade?

Traders should ensure their account is healthy (meaning it’s leveraged less than 2x-3x) prior to the upgrade. If you have existing positions and your account’s margin ratio is lower than 50%, it is recommended to deposit more collateral before June 6th 15:30 UTC (or close out all of your positions before this time).

Foundation team members will be on duty to monitor the progress of the upgrade and assist any users just in case anything unexpected happens.

• How will I know when the upgrade is complete?

Check Optimism’s official status page here or turn on notifications for Optimism’s official Twitter account.

We’ll also post updates on Discord, Telegram and Twitter to inform users that Bedrock has been activated. Another update will also be posted to let our users know that trading on Perp has resumed.

• Will I notice any changes after the Bedrock upgrade?

While remaining mostly the same following the Bedrock upgrade, there are some improvements to the user experience that may be noticeable:

• Lower transaction costs: Bedrock improves data compression and removes all L1 execution gas to achieve the minimum theoretically possible L1 data costs. Gas fees are expected to decrease by around 10% as compared to the previous version of Optimism.

• Shorter waiting times when bridging funds to Optimism from mainnet: the time users must wait when depositing to Optimism will be reduced thanks to the introduction of support for L1 re-organizations in the node software. Deposits will be expected to finalize within 3 minutes, down from the previous 10 minutes.

• Enhanced security for withdrawals from the Optimism chain: a two-step withdrawal process is introduced to minimize the occurrence of withdrawal proof validation bugs, which substantially reduces the risk of a bridge being compromised.

As a complete rewrite of the entire rollup stack, Bedrock is the most important update yet for Optimism’s mainnet. Bedrock paves the way for further, exciting updates such as the next-gen fault proof system Cannon and the Superchain (a network of L2 chains).

If you have questions about Bedrock or want to discuss anything Optimism related, talk to us on Discord or Telegram!

Links

• Website

• Twitter

• Discord

• 
  

Perpetual Protocol (=ↀωↀ=)

@perpprotocol

The beta for PerpSim, a simulation tool built for LPs by @componentfi, is now live!

perpsim.com

Add liquidity to our pools, claim Pool Party rewards and backtest your strategies with an alternative interface tailored to makers

perpprotocol.mirror.xyz

PerpSim: The Ultimate Simulation Tool for LPs

Component received a grant from Perp in February to build PerpSim, a simulation tool for liquidity positions on Perp v2, which is now live in beta!

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8:41 AM • Oct 26, 2022

The creators of PerpSim, Component.fi, have been refining the product over the past few months, recently introducing a series of new features that empower Perp users to make more informed decisions and improve their overall experience.

Seamless Management of Maker Positions

Imagine a harried trader named Peter, juggling multiple positions in his Perp portfolio. The constant toggling between positions becomes tedious. He can't help but feel he’s not making the most of his capital.

PerpSim's Current Positions View was built to consolidate all of Peter’s positions into a single, easily accessible interface, allowing him to quickly assess and edit his investments. Peter can now seamlessly delve into each position's details, from its status in or out of range to impermanent loss and PnL.

With a deeper understanding of his portfolio, Peter focuses on fine-tuning his liquidity management. Edit Liquidity Positions is a feature that offers the ability to add or remove liquidity from any position as needed.

This newly added level of control complements Perp’s current mechanisms by enabling Peter to simulate the performance of a potential position and manage existing positions in the same interface. The result? More efficient capital allocation amidst the ebb and flow of the market. Traders like Peter no longer need to go outside of PerpSim to manage their LP portfolio end-to-end.

Navigating Market Uncertainty

In an ever-changing market, being able to predict future outcomes can be a game-changer. PerpSim's new Predictive Metrics employ Brownian motion and other market-related factors to generate a range of probable outcomes for the asset over a specified period. With this data at his fingertips, Peter is now better equipped to navigate the uncertain waters of the DeFi market.

In addition to Predictive Metrics, savvy traders want to make decisions based on an asset’s historical performance but are wary of extreme events that may have skewed its volatility. PerpSim’s User Defined Timeframe of Reference allows Peter to tailor the data to his preferences and examine the asset's volatility and drift terms while excluding any unwanted anomalies. This personalized view delivers a more accurate picture of the asset's past and potential future performance.

Component’s latest updates to PerpSim were built to enhance user experience and empower traders on Perp to make better informed decisions. As the market continues to grow and transform, PerpSim is an indispensable tool in any trader’s toolkit. A well-balanced blend of control, predictive insights, and streamlined functionality help traders not just survive, but truly thrive in the world of DeFi.

Try the PerpSim beta now:

https://perpsim.com/

The Component team is always seeking user feedback. Submit via our Discord server or fill out this form.

Links

• Website

• Twitter

• Discord

• Youtube

This article provides a comprehensive guide on setting up a bot for automated TWAP execution on Perp, enabling traders to minimize the market impact of large orders and attain better entry prices.

Introduction to TWAP

As an algorithmic trading strategy that aims to achieve an average execution price of an asset over a specified period, TWAP execution allows traders to submit larger orders without significantly affecting the market price. This is achieved by breaking a large order into smaller chunks and executing them at regular time intervals.

The TWAP bot outlined in this article can be used by traders to achieve better execution prices. The benefits of automated TWAP execution are explained in more detail in the following section.

Benefits of Automating TWAP Execution

The advantages to using a TWAP bot for executing trades on Perp are:

• Reducing slippage: The TWAP execution bot minimizes slippage, reducing the difference between the expected execution price of a trade and the actual execution price.

• Minimizing market impact: By distributing large orders over time, the TWAP bot reduces the likelihood of causing sudden price movements that could be detrimental to the trader's position. TWAP execution is especially useful for markets where liquidity is thinner.

• Automating trade execution: Traders can automate their trading strategy to scale in, and scale out, of positions without manual intervention.

• Optimizing execution prices: TWAP orders allow traders to get the best possible price for their order. If there’s elevated price volatility and the market is near an important support level, using TWAP execution to go long will evenly distribute the buy orders over time. In turns, this helps the trader get a better average entry price as compared to opening a position manually through the UI.

• Suitable for various market conditions: The TWAP algorithm can be used in both trending and range-bound markets, making it a versatile trading strategy.

Setting up TWAP Execution on Perp

A bot that automates TWAP execution can be used by traders to split orders into smaller ones over a specified period. By following the 5 steps below, traders can programmatically scale in and out of positions over time on Perp.

1. Clone the GitHub Repository

2. Download Yarn

3. Edit the Config.json File

4. Create the .env File

5. Run the TWAP Execution Bot

1) Clone the GitHub Repository

The first step is to go to the bot’s GitHub repository:

Find the green “Code” button and then click on “Download ZIP”.

Unzip the folder. The contents of the folder are shown in the screenshot below:

Alternatively, you can use the following command in your Terminal application:

git clone https://github.com/grantweii/perp-algo-executor.git

2) Download Yarn

Open the Terminal application and enter the following commands:

cd perp-algo-executor

Yarn install

3) Edit the Config.json File

The third step is to edit the config.json file, which can be found by going to perp-funding-arbitrageur > src > config.json. The file can be opened and edited using a text editor.

The screenshot below displays what you’ll see once opening the config.json file with Visual Studio Code:

You’ll notice that from the screenshot above that two strategies are supported:

• spread: a simple arbitrage between a hedge exchange and Perp.

• twap: splits an order into multiple child orders and executes them at an interval, thereby achieving an average price over a specified period.

The first 14 lines of code displayed in the file above specifies a spread strategy that runs funding rate arbitrage between Binance and Perp for the AAVE market. While lines 16-33 specifies a TWAP execution strategy to open a long position for the ETH market on Perp.

Spread

For the spread strategy, let’s assume the funding rate is high for SOL. If a trader enters a $100,000 hedged SOL position to capture the funding payments but only wants to enter when the prices are in their favor, they can run the spread strategy.

To do so, the optional hedge parameter must be enabled, which will automatically hedge your position. The code snippet below shows what the config file should look like if you want to run the spread strategy for SOL.

EXECUTION.MIN_SPREAD is the strategy specific parameter for spread. In other words, the minimum difference in basis points required for the execution condition to pass.

• A MIN_SPREAD of 5 means the effective short price must be at least 5 basis points greater than the long price in order to pass (favorable arb).

• Alternatively, MIN_SPREAD of -5 means the short price must be at most 5 basis points lower than the long price in order to pass (possibly unfavorable arb).

The spread is calculated as follows:

EXECUTION.ORDER_NOTIONAL refers to the size of each child order and SLIPPAGE refers to the maximum slippage tolerance, measured in basis points.

TWAP

Focusing in on the TWAP execution strategy, the EXECUTION.PARTS field shows that the total position will be split into two $100 buy orders. EXECUTION.PERIOD shows the expected time to scale to the TOTAL_NOTIONAL (total notional position) of $200.

Given that 5-minutes are specified for the execution period and there's two child orders, the $200 ETH position will be opened using two orders across 2.5-minute intervals.

The description of the other fields are shown below:

• POLL_INTERVAL: the time between iterations (in milliseconds).

• HIDE_SIZE: if the field is set to true, the TWAP execution will execute a random size between 0.9 to 1.1 times the child order size.

• CLOSE_ONLY: must be specified if closing a position. Effectively, it acts like a reduce only. Set to false when opening a position, or true for closing a position.

Let’s look at another example, assuming a trader wants to enter a $100,000 long position in the DOGE market. The price impact of this is close to 1% if executed with a single order. So a trader is better off slicing the order into multiple parts and TWAP in over time.

If a trader wants to split this $100,000 position into 20 child orders over a 4-hour time period, then they can edit the config file and enter the code below:

After the TWAP order has been fulfilled, a trader can also scale out of their position by doing the following:

• Updating the CLOSE_ONLY parameter to ‘true’ in the config.json file,

• Inverting the PERP_DIRECTION parameter (in this example, changing it from long to short),

• Running the bot again (see step 5).

4) Create the .env File

Now that the strategy has been specified, the next step is to edit the .env.example file and create a .env file in the root directory.

Here’s what the .env.example file looks like before entering the required information:

To run the TWAP strategy, enter the private key of the wallet you want to use for execution. Once you’ve entered your private key, save the file and rename it as ‘.env’.

The API key and secret for your Binance account are required for running the spread strategy. You can also specify the RPC you want to use. It is recommended to use your own Optimism RPC as the public RPC is rate limited and you may get banned for excessive use.

To provide another example of how the automated TWAP execution works, you can use the code displayed below to long ETH and open a total notional position of $2000, which is split into 20 child orders over a 15-minute period.

Once the config.json file has been edited, click on ‘File’ then ‘Save’ in Visual Studio Code.

5) Run the TWAP Execution Bot

Now we’re all set to start running the automated TWAP execution strategy to scale in or out of positions on Perp, or run a funding rate arbitrage strategy between Binance and Perp.

Go back to the Terminal window, input the following command and press enter:

npm start

The TWAP strategy that was specified in the config.json file will be automatically executed over time for the wallet associated with the private key entered in the .env file.

If the bot encounters any errors, you may have input the wrong parameters. Just follow the error message and update your parameters. You may also encounter an error if the root administrator is not enabled. Root administrator can be enabled by entering su [adminUsername] in Terminal.

Considerations for Automating TWAP Execution

The bot outlined above is the first iteration for building a TWAP-based execution strategy, but there are some factors to consider while executing this strategy:

1. Funding rate The position will earn/pay the funding rate while the order is being executed. The historical funding rate can be queried from The Graph’s API here.

2. Gas Maintain enough gas in the wallet to execute the transaction. The tool does not monitor gas in the wallet or support the maximum gas setting.

3. Margin ratio Perp allows up to 10x leverage for traders. If your position is using leverage, have a plan in place to manage risk and ensure you have enough margin ratio to avoid liquidation during the TWAP execution. More details about position liquidation can be found here.

4. Execution not guaranteed The order might not get executed fully if the slippage tolerance, gas balance or minimum spread parameters are set too low.

5. Monitor liquidity while executing funding rate arbitrage For large positions, it might be difficult to exit the position quickly if liquidity is thin or price volatility is too high.

And that’s the end of our tutorial on automating TWAP execution on Perp! If you have any feedback or questions, come and chat to us via the dedicated thread in the #general channel for this tool on Discord. If you want to enhance the TWAP bot, you can fork it or submit a pull request to the GitHub repository.

Links

• Website

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Introduction to Stablecoins

Stablecoins are one of the most successful applications of cryptocurrencies that offer a wide range of use cases, such as:

• Offering a sanctuary from the volatility of crypto-assets like Bitcoin and Ethereum,

• Earning yield in DeFi, and

• Protecting people’s wealth in countries that experience hyperinflation.

As a distinct category of cryptocurrencies, stablecoins differ from other cryptocurrencies because they are pegged to a specific fiat currency or commodity (such as the US Dollar, the Euro or gold), meaning that they do not fluctuate wildly in value.

However, similar to Bitcoin and other crypto-assets, stablecoins are also based on blockchain technology. That means these digital assets are available 24/7, with greater accessibility for the unbanked and much easier to transfer than physical currency.

Stablecoins are not all the same, though. Different methods are used to ensure they keep to their peg, along with a variety of minting and redemption mechanisms. When talking about stablecoins, it’s important to keep in mind there are three main types:

1. Fiat-collateralized stablecoins which are backed by currencies like the US dollar or the euro. The advantage of this model is that they are more suited to maintaining price stability. However, the drawback is that they are more centralized since they’re usually operated by a single or a handful of corporate entities. They also require audits to verify the value of the assets held off-chain. These types of stablecoins have gotten the most traction so far, with some examples being Tether’s USDT, Circle’s USDC and Binance’s BUSD.

2. Crypto-collateralized stablecoins that utilize a reserve of crypto-assets such as Ethereum to guarantee their value. The advantage of this model is that it tends to be more decentralized. However, capital efficiency is a disadvantage which affects the scalability of these stablecoins, since their users are required to be overcollateralized. For example, $100 worth of a crypto-collateralized stablecoin may only be minted by putting up at least $150 worth of ETH. Some examples are MakerDAO’s DAI, Liquity’s LUSD and Synthetix’s sUSD.

3. Algorithmic stablecoins aim to maintain a stable value without any collateral backing. This model is the least proven and least successful to date. One example of an algorithmic stablecoin is Terra’s UST, which collapsed back in May 2022.

Each model makes different trade-offs, which gives rise to the term of the ‘stablecoin trilemma’. The trilemma states that such an asset cannot have all three properties of capital efficiency, decentralization, and price stability. There are also hybrid models which combine aspects of the different models highlighted above, such as FRAX, which is a cross between an algorithmic and a crypto-collateralized stablecoin.

Source: stablecoins.wtf

A Brief History of Stablecoins

The need for stablecoin emerged due to the friction between traditional finance and the crypto world. Prior to the beginning of the ascent of stablecoins in 2015, cryptocurrencies were mostly traded against BTC.

However, as the demand for cryptocurrency grew, the need to exit positions in these volatile assets without having to go through the traditional finance system (which is often costly, hostile to crypto, and slow) became greater.

The rising popularity of stablecoins over the years can be attributed to the fact that they can be sent and received instantly. They do not need intermediaries like banks and do not carry the burden of regulations or restrictions that apply to fiat currencies.

The list below details some (but not all) of the main events in the history of stablecoins:

• BitUSD, a crypto-collateralized stablecoin backed by BTS, was introduced in July 2014 on the BitShares blockchain. However, it lost parity with the US Dollar at the end of 2018.

• NuBits was another early stablecoin experiment which saw two failures in maintaining price stability: once in 2016 and another at the beginning of 2018, where the price crashed from $1 to $0.30 in less than 2 weeks.

• Tether USD (initially called RealCoin) was introduced to the crypto market by Bitfinex and Tether Inc. in 2015 and took a different approach to BitUSD and NuBits by collateralizing the stablecoin with off-chain assets.

• MakerDAO's decentralized stablecoin DAI launched in December 2017 on Ethereum’s mainnet as one of the earliest DeFi projects. The blueprint for DAI was outlined by MakerDAO founder Rune Christensen in 2015 in this Reddit post.

• BUSD was introduced in 2019 and one of the first stablecoins to receive backing from New York regulators.

• FRAX was announced in May 2019 and launched in the following year in 2020, becoming the first stablecoin to utilize crypto collateralization and algorithmic stabilization to maintain its peg to the US Dollar.

• RAI launches as an alternative to DAI in February 2020. It’s backed by ETH, but not pegged to any stable asset. Instead, the price adjusts algorithmically over time.

• Liquity’s LUSD launched in April 2021 as an ETH-backed stablecoin that’s completely immutable, with no governance.

• The UST collapse during early May 2022 drew criticism, as well as increased scrutiny, of cryptocurrencies and stablecoins.

• Aave released the technical whitepaper for its GHO stablecoin in October 2022.

• Curve Finance deployed its crvUSD stablecoin in May 2023.

• In April 2023, a multi-collateral version of the RAI stablecoin was proposed and is due to launch on Optimism in July 2023.

How do Stablecoins Work?

The three different categories of stablecoins mentioned have implications for price stability and whether there’s a need for trust.

Fiat collateralized stablecoins work by holding a reserve of the underlying fiat currency equal to the number of stablecoins in circulation. For example, if there are 1 million stablecoins in circulation, the issuer should hold $1 million in reserve. This ensures that the stablecoin's value remains stable and is not affected by market volatility. However, the user has to place some trust in the company that issues and redeems them so that they are not ‘cooking the books’ or engaging in accounting fraud.

On the other hand, crypto-collateralized stablecoins that utilize a reserve of other cryptocurrencies get around the issue of trust by decentralizing issuance and redemptions. But the trade-off is that these types have to use a trusted oracle since there’s no way for blockchains to track the price of any collateral used to mint these types of stablecoins.

In the following sections will examine the most popular stablecoins, explain how they work and their pros and cons.

USDT

USDT is currently the leading stablecoin with a dominance of 63.33% according to DeFiLlama and the company behind Tether works closely with cryptocurrency exchange Bitfinex.The minting and redemption of these tokens for USD is only available to Tether customers who have undergone a verification process.

Tether can be described as a fiat-backed stablecoin, but it has been the subject of much controversy over the years. Critics claim there are no adequate audits or a lack of collateral assets to back up the USDT supply. Nevertheless, it is dominant when it comes to trading volumes, likely due to its first-mover advantage.

As well as USDT, Tether also offers many other stablecoins. For example, the EURt which is pegged to the Euro and XAUt, which is pegged to Gold.

USDC

USDC, launched by Coinbase and Circle, is the most widely used stablecoin in DeFi applications since it is perceived as the safest stablecoin since it is fully regulated in the US (unlike USDT). But as with USDT, the mechanism for keeping the peg is similar: users are incentivized to mint (or redeem) new tokens when the price is too low (or high) to maintain price stability. Therefore, arbitrageurs can earn a profit by helping to maintain the peg.

USDC is fully backed by cash and short-dated U.S. government obligations, so it is always redeemable 1:1 for U.S. dollars. The minting and redemption for USD is only available to eligible businesses with a Circle Account. What’s notable about USDC is that it is available across many more chains than USDT (which is predominantly based on Tron and Ethereum).

BUSD

BUSD, created by Binance, is backed by fiat to maintain a 1:1 value with the US Dollar. This stablecoin is approved by the New York State Department of Financial Services (NYDFS) and issued in partnership with Paxos. The minting and redemption of BUSD can be done through Paxos, but only for customers who have undergone a verification process.

However, Paxos has been in talks with the SEC since February 2023 after the American regulatory agency said that it should have registered BUSD as a security. The total supply of BUSD dropped sharply following the news, currently standing around $5.76 billion (the lowest value since April 2021).

Source: CoinMetrics

While USDT, USDC and BUSD are the most popular centralized stables, there are alternatives that are more decentralized and have gained a lot of traction amongst crypto users. In the following sections, we’ll provide a brief overview of the three most popular decentralized stablecoins.

DAI

DAI was introduced in 2017 by MakerDAO that maintains a ‘soft peg’ to the US Dollar. The MKR governance token plays a role in governing the system, such as adding new collateral types or adjusting the protocol’s parameters.

Source: MakerDAO

To maintain this peg, a system of collateralization and stability fees are used. Users can deposit any Ethereum-based asset as collateral into Maker’s vaults and mint up to 66% of the collateral’s value in DAI. If the value of the collateral falls below a certain threshold, the collateral is liquidated to ensure that the DAI remains fully backed. When the loan is repaid to retrieve the collateral, the DAI that’s paid back is burned.

While DAI is the first decentralized stablecoin that comes to mind for most people involved in crypto, there are some drawbacks to be aware of. Most of its balance sheet consists of USDC, so it essentially relies on another stablecoin that is centralized and backed by fiat.

This has led to debate about whether DAI should be fixed to the US Dollar and allowed to float freely in order to prioritize the decentralization property from the stablecoin trilemma mentioned earlier in this post. Nevertheless, MakerDAO plans to improve decentralization and improve innovation in DeFi with their long-term plan, known as the ‘Endgame’.

Another project that has pursued the floating peg idea proposed for DAI is RAI, created by Reflexer Finance. RAI sacrifices the price stability aspect of the stablecoin trilemma and instead focuses on decentralization and capital efficiency. However, RAI is only backed by ETH but more recently, a multi-collateral version of this stablecoin was proposed to be launchd on Optimism (known as HAI).

FRAX

Frax Finance’s FRAX is an interesting and unique design that uses a FRAX-USDC base pool on Curve as a swap facility and Algorithmic Market Operations to maintain its peg.

To mint FRAX tokens, users need to supply two collateral tokens: USDC and the project’s governance token, known as Frax Shares (FXS). When the demand for FRAX stablecoin increases, the system can expand the money supply beyond the total collateral in the system, ensuring stability.

Source: Eugene Ang

The project’s FXS token gives governance rights to holders and the ability to vote on adjustments to collateral pools, add new pools, and change the collateral ratio. FXS holders can also lock FXS into veFXS to earn a portion of the protocol’s revenues. As more FRAX tokens are minted and used, it is expected that more FXS tokens will be burned and removed from circulation.

To dive deeper into FRAX, check out the guide linked below:

https://flywheeldefi.com/p/frax-101-what-is-frax-a-complete

As well as the USD-pegged FRAX, the project also offers two other stablecoin products:

• an inflation-resistant stablecoin FPI that uses the US Consumer Price Index to adjust its price and maintain purchasing power with on-chain stability mechanisms.

• frxETH is pegged to ETH and can be staked to earn validator/MEV rewards, providing an alternative to solo staking and other liquid staking derivatives.

LUSD

Liquity’s LUSD has seen more adoption and attention in recent times given the concerns around stablecoin centralization. While it works in a similar manner to DAI, there’s a more attractive collaterization ratio where up to 90% of the collateral value can be used to mint LUSD.

However, only ETH can be used as collateral since it is more decentralized and cannot be censored (unlike USDC). Liquity also differs from MakerDAO in that it takes a ‘governance minimization’ approach and is completely immutable.

Through Liquity’s troves, users can mint LUSD using ETH with 0% interest and pay a one-time fee of 0.50%. The system allows LUSD holders to redeem their tokens for the underlying ETH collateral at face value at any time. When a trove falls below the 110% collateralization ratio, the liquidated ETH is distributed to those that provide LUSD to the Stability Pool, effectively allowing these users to automatically dollar cost average into ETH.

Source: DeFiLlama wiki

LUSD has a price floor at $1, and if the peg is lost to the downside, holders of LUSD can always redeem it for $1 worth of ETH. However, there’s a soft peg between $1.00 and $1.10, so the LUSD value can fluctuate within this range.

But the stability mechanism ensures it is pulled back down close to $1 when needed, as explained in this blog post. Because of this mechanism, LUSD has performed well even in extreme market conditions and has even consistently displayed a slight premium against the US Dollar.

Uncovering Insights into Stablecoins

The supply growth of a stablecoin is a good metric to track the adoption of these different options presented above. Tracking stablecoins flows can also help with investing decisions and help you to assess the risk appetite of traders.

The following list provides a non-exhaustive list of resources to uncover insights into stablecoins and the wider crypto ecosystem:

• CoinMetrics: monitor on-chain indicators such as active addresses, supply growth and more.

• CryptoQuant: track supply, exchange flows and number of transactions.

• Dune Analytics: discover a variety of stablecoin-related dashboards built by Dune Wizards (useful if you want to dive deeper into a particular project).

• DeFiLlama: provides a ranking of different stablecoins, as well as detailed information on their TVL, peg deviation and much more.

• Nansen: offers detailed stats on stablecoins, such as exchange flows and smart money percentage holdings in stablecoins indicator to gauge whether “smart money” addresses are holding stables or deploying them to non-stable crypto-assets.

• Stablecoins.wtf: A Bloomberg terminal styled website educating degens about stablecoins.

Earning Yield with Stablecoins in DeFi

DeFi is a new type of financial system that is built on blockchain technology. It aims to provide an alternative to traditional financial systems by allowing users to access financial services without the involvement of intermediaries like banks.

Stablecoins play a crucial role in the DeFi ecosystem. They are used as a medium of exchange, a store of value, and a unit of account. They enable users to access DeFi services without the need for traditional fiat currencies.

For example, you can borrow or lend stablecoins with automated lending protocols such as Aave, use them as collateral to trade or market make in a decentralized way on Uniswap or Perp, or earn a return using automated investment strategies provided by projects like Reaper Farm or Yearn Finance. Perp also has a vault product, known as Hot Tub, that allows you to earn yield in USDC. Sign up for updates about the Hot Tub and get whitelisted.

Risks Associated with Stablecoins

While stablecoins offer several advantages over traditional cryptocurrencies, they are not without risks. One of the major risks associated with stablecoins is the risk of collateral failure. If the collateral backing the stablecoin fails, the stablecoin's value can become unstable, leading to significant losses for investors.

Another risk associated with stablecoins is the risk of regulatory intervention. Regulators may impose harsh restrictions on stablecoins, which could impact their value and popularity. In such a scenario, only the most decentralized stablecoins will survive.

The Future of Stablecoins

The future of stablecoins looks bright. As more investors and traders seek stability in their investments, the demand for stablecoins is likely to increase. Expect to see more innovation in the stablecoin space, with some recent newcomers being Aave’s GHO, Curve’s crvUSD, Reflexer’s HAI and Rico. While stablecoins are not without risks, their future looks bright given that as more investors get involved in DeFi, the demand for these popular crypto-assets is likely to increase.

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These adjustments are necessary to ensure the sustainability of the reward programs, in particular to keep the Pool Party running for as long as possible and to make way for some larger updates.

Let’s now take a look at the changes for each of the respective reward programs, the first of which will begin to take place in just under one month’s time.

Pool Party

A reduction in the liquidity mining rewards for the Pool Party initiative will go into effect from Monday, June 19th.

As a result, LPs may receive lower rewards for the liquidity they provide during the week commencing June 12th.

The total amount of PERP tokens paid out to LPs across all markets currently stands at 360,000 PERP per month. Starting on June 19th, this monthly amount will be reduced to 260,000 PERP. OP rewards will remain unchanged at 360,000 per month.

The exact breakdown of the Pool Party rewards adjustments is shown by the table below, indicating the amount of PERP tokens allocated to each market every week:

Lazy River

A reduction in vePERP rewards for Lazy River will go into effect as of Thursday, June 22nd.

The token emissions were intended to incentivize more stakers to join Lazy River and increase the locked portion of the token supply. The intention was always to eventually reduce the vePERP rewards that boost the fee distribution to zero. We’ve seen great progress so far, with almost 15% of the total token supply locked into vePERP and earning a sustainable yield.

Lazy River stakers are also enjoying decent rewards from the USDC fee distribution alone (above 14% APR!). We’ll continue working on making this stablecoin yield as attractive as possible and it’s now a good time to trim the rewards paid from token emissions (vePERP).

As there’s more progress with the Hot Tub vaults (as well as other areas such as marketing and partnerships) to increase trading volume, our aim is to boost the amount of USDC that vePERP stakers can expect from the weekly fee distributions.

However, the portion of rewards coming from token emissions is set to be reduced from the current weekly cap of 25,000 vePERP to 15,000 vePERP from June 22nd.

Referral Program

The referral program will be discontinued and the last distribution of rewards will take place on Monday, June 12th.

The referral program has not been that successful in increasing the amount of locked PERP and has had little impact on the volume generated by referral partners.

As a result of the factors mentioned above, and because these types of rewards programs in general are susceptible to misuse by people who farm the rewards, the decision has been made to sunset the referral program.

After the last referral rewards have been paid out on June 12th, any remaining vePERP that you’ve earned can be claimed using the page linked below:

You may be wondering if a referral program will ever return to Perp? It’s possible, and we’re currently working on a new system that will prevent the farming of referral rewards.

A reduction in rewards is not something that our community may want to hear. But these adjustments help to extend the lifespan of these programs for as long as possible. Ultimately, optimizing the reward programs at this stage helps to prepare the protocol for a future without any incentives at all (something that’s inevitable for existing DeFi protocols).

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Want to go on a crypto treasure hunt and earn some easy money through airdrops?

Read on as this playbook will cover the ins and outs of airdrops, explaining the different methods that can be used to earn your first stack of cryptocurrency or grow your portfolio without breaking the bank. We’ll also highlight the best resources to help you stay updated on the latest airdrops.

What are Cryptocurrency Airdrops?

Airdrops are used by projects to distribute tokens to existing holders of a particular cryptocurrency (such as Bitcoin or Ethereum) and to bootstrap a community by rewarding early adopters.

As the most cost-effective way for investors to get their hands on new cryptocurrencies, users can potentially earn substantial profits, especially if the distributed tokens increase in value over time. Although airdrops are perceived as ‘free money’, there’s nothing guaranteed about their value or even if an airdrop will take place, since many projects will deny that a token is in the works or may not distribute a token at all.

For projects that go ahead with an airdrop, they can be categorized into two broad types: retroactive and takeover.

• Retroactive airdrops: reward users who have contributed to or been involved with the project before a certain date. This type of airdrop is often used to generate buzz around a soon-to-be-launched token, serving as a mechanism for bootstrapping community growth and creating liquidity.

• Takeover airdrops: targets users and liquidity providers who are highly engaged in activities such as staking with the goal of attracting them away from competing decentralized finance (DeFi) protocols. This type of airdrop is often used to lure users from rival platforms and retain them by offering higher rewards.

6 Tips for Earning Cryptocurrency Airdrops

Now that you have an understanding of what a crypto airdrop is, you’re probably keen to learn how to take part in this ‘digital gold rush’. In the following sections, we’ll outline 6 ways to find the best opportunities to increase your chance of claiming the next big airdrop.

1. Discover New (and Tokenless) Protocols Early

The early bird gets the worm as they say. And this concept also applies to airdrops, with the highest yielding opportunities being the ones no one is talking about yet. You have to be super early to a protocol and frequently interact with it to have the best shot at earning a substantial airdrop. Of course, this is more difficult and riskier than some other options in this list, but here are a couple of pointers.

One way to find recently launched projects is to use Etherscan’s newly verified contracts page. Not all of these contracts will launch a token, but it can be a useful tool to stay on top of the latest developments and trends. After scouting newly verified contracts, some further research is required to assess the safety of a new project. The following tools can be used to help you to avoid being rugged: Rug Doc and Token Sniffer.

A more straightforward way of ‘being early’ is to check the airdrop page on DeFiLlama for a list of tokenless protocols.

By being an early adopter of tokenless protocols, you’ll have interacted with the protocol’s contract more often and you’re more likely to become eligible for a potential airdrop. Another tip: filter DeFiLlama’s list by TVL and/or total money raised for a higher chance of success.

2. Join Earndrop Alpha’s Discord

Earndrop has a website that provides notifications of drops you’re eligible for. They also have a great Discord server, called Earndrop Alpha, where you can find more potential token drops and discuss a variety of opportunities with the community.

To stay updated on the latest opportunities, you should also follow the brains behind Earndrop on Twitter (olimpio.eth).

3. Follow Airdrop Hunters on Twitter

As well as olimpio.eth, there are plenty of other airdrop hunters on CT. Here are 4 of the top airdrop hunters worth following that are posting alpha:

• Alpha Frog: make sure you also join the dedicated Telegram channel for tips that don’t make it to Twitter!

• DeFi Airdrops: like Alpha Frog, there’s also a dedicated Telegram channel.

• DefiCalendar: they also have mainnet and testnet guides on their Substack to help you earn airdrops.

• Mingo Airdrop: Mingo is a popular airdrop hunter that also has a Telegram channel as well as a Substack publication called “A Slight Airdrop of Alpha”.

4. Monitor Claimable and Upcoming Airdrops

There are a host of websites dedicated to airdrop hunting, with some good examples listed below:

• Airdrops.io: shows the latest, hottest and potential airdrops. They also have a Telegram channel and weekly email updates.

• Airdropalert.com: the first airdrop alert platform that’s been running since June 2017 listing new and sponsored airdrops Airdrop Alert also has a Telegram channel and sends out a weekly email.

• Airdropbob.com: like the two previous entries, airdrop bob provides a list of airdrops but also a calendar so that you know when the window of opportunity closes for a particular token.

• Airdrops.one: a list of airdrops in the Cosmos ecosystem. Stakers of ATOM and OSMO are often eligible for newly launched tokens.

• Earni.fi: join to find unclaimed airdrops and get email notifications of when you’re eligible to claim new tokens.

• Daylight: a website that helps you discover claimable airdrops and wallet abilities (minting NFTs, POAPs, and so on).

5. Copy Trade the Most Successful Airdrop Hunters

Another great way to increase your odds of earning some tokens is to track the wallets of the most successful airdrop hunters and copy their on-chain actions. The Dune Analytics dashboard linked below ranks the addresses that have received every large airdrop in the past few years.

Dune | We are hiring!

@Dune

6/ Airdrops & Wallets

@cypher_frog

dune.com/cypherpepe/air…

129

8:54 AM • Feb 3, 2023

Add these addresses to a watchlist using a platform like DeBank and then tag them using a label such as ‘airdrop pros’. Frequent monitoring of what they’re doing next provides you with a better likelihood of catching the next big airdrop.

Another pro tip: snoop on Vitalik Buterin’s address to find new protocols!

6. Become a Power User of DeFi & NFT Platforms

Becoming a power user of DeFi protocols pays dividends in many cases!

Several projects have airdropped their token to addresses that have generated high volumes on competitor platforms through ‘takeover airdrops’, which is a variant of the vampire attack.

For example, ApeXDex airdropped their token to power users of the most popular decentralized exchanges (dYdX, GMX and Perp).

ApeX Protocol

@OfficialApeXdex

Pro-tip: If you have traded on @dYdX, @GMX_IO or @perpprotocol, you might actually be eligible for the 1,000,000 $esAPEX airdrop.

Find out more: apex.exchange/blog/detail?id…

15

6:00 AM • Dec 8, 2022

Blur did something similar for power users of OpenSea, where users that only listed NFTs on their platform rather than other marketplaces received more rewards.

Blur

@blur_io

300M+ BLUR will be distributed to the community in Season 2.

What’s the secret to maximizing rewards? Loyalty.

Users with 100% loyalty have the highest chances of Mythical Care Packages, which are worth 100x Uncommon Care Packages.

Here are 3 ways to maximize your loyalty

5,658

4:25 PM • Feb 21, 2023

Risks of Airdrop Hunting

While airdrop hunting sounds like fun and can be a profitable exercise, it requires you to put in the time and some of your funds at risk. Below we outline three key risks to be mindful of:

• New protocols are unaudited. Because they have no track record (or a very short one), there’s an increased risk that the protocol will suffer from a bug or an exploit. To avoid losing your entire holdings, use a burner wallet for each prospective airdrop.

• Another risk is that you’re using your own funds and taking the time to interact with a protocol, but it ends up not launching a token. Or you might miss out on the criteria. There’s also an opportunity cost: instead of using your funds to farm an airdrop, you could’ve invested in or traded a token that delivered a real return in a shorter time period. Remember, the more transactions and volume you do on a protocol that you think is going to do an airdrop, the greater the likelihood you’ll receive a higher amount.

• Always be cautious and DYOR before participating in any airdrop or investment opportunity. Be vigilant against scams on social media that pretend to offer airdrops. These impersonators link to malicious websites that will compromise your wallet. Never reveal your seed phrase, private key or send money to any account that’s claiming to offer an airdrop.

  • Pro tip: use the Rabby browser wallet, which decodes transaction data for you, does a security check on every transfer and offers an address whitelisting feature.

Airdrops offer an exciting opportunity to earn some crypto with very little effort (at least compared to trading). By staying informed, becoming a power user of different DeFi projects, and/or trying out new protocols early, you can maximize your chances of reaping the rewards.

Once you’ve been rewarded for your time and efforts, don’t forget to claim the tokens in time and lock in your profits! The dashboard created by Messari (which is displayed above) shows that selling airdrops within the first week a new token begins trading on exchanges delivers the best return (while forever HODLing has so far been the least profitable strategy).

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