🟣 Brevan buys our bags

LRT depegs should not be taken lightly

April 25, 2024

Welcome back to 0xResearch – quick hitting alpha for the crypto degens. Here's what we got for you today:

  • Crypto remains range bound

  • BONK <> Revolut

  • Brevan makes a “tiny” investment in memes

  • Real World Assets v. Net New Assets

BTC is at $63k with Blackrock’s bitcoin ETF ending its 71-day streak of daily inflows yesterday. Zooming out, BTC remains range bound with the other majors, and crypto markets broadly are sideways to down. Retail favorite TSLA beat earnings after the bell on Tuesday and the stock popped, but META reported a “disappointing” revenue outlook yesterday, coupled with high opex and capex (read: AI spend), seemingly offsetting the positive news for tech-focused investors. AI coins were lower both last night and this morning as a result of META earnings. BONK is the only bright spot on my charts today. 

All good things must come to an end, so it’s not immediately bearish that Blockrock’s Bitcoin ETF snapped its streak of daily inflows. The streak is impressive historically. IBIT’s daily inflow win streak was the 10th longest in ETF history, further underscoring the success of Bitcoin’s inclusion into the ETF space and traditional investor portfolios.  

Memecoin fundamentals keep compounding and morphing. First, BONK - a meme with a team - passed a proposal to burn some BONK, which sent the price of the token higher. More importantly, BONK went live on Revolut this week. Revolut is a fintech platform and powerhouse in the neobank space, serving over 40 million customers globally. The partnership with BONK is a learn-to-earn program, where Revolut customers can score some BONK for learning more about the crypto industry.

The morphing fundamental landscape of memecoins is catching investor eyes, both in crypto and TradFi. Yesterday, Bloomberg reported that hedge funds are increasingly viewing meme coins as viable investments. Most notably, the report mentioned that Brevan Howard, a globally recognized macro hedge fund with over $34 billion in AUM, has gotten in on the action, making a “tiny” investment into the memecoin space. 

While I think real world assets in crypto are cool, I believe crypto’s super power is its ability to create net new assets - assets that previously didn’t exist, and couldn’t exist without crypto rails. Memecoins fit this description, but so do perps, L1 tokens, BTC, PFPs, and real estate trading platforms like Solana’s Parcl. TradFi is always in search of new, unique return streams. Because of this, I am more of the view that new assets are the trojan horse than bridges TradFi to crypto. Time will tell.  

— ryan (X: _ryanrconnor | Farcaster: ryanconnor)

Thousands of rollups will continue to launch. With that, rollup interoperability presents a major challenge. Our latest unlocked report here unpacks how Avail presents a potential solution to rollup fragmentation through its three products: Avail DA, Nexus, and Fusion. Avail, the unification layer for web3, may prove to be the logical end game for DA layers, so if you’re interested in what that means, check the report out!

Part 2 of the Renzo De-Peg

Source: TradingView

I get it, LRTs and restaking are novel and useful. It’s a new unlock for crypto market capital markets. These things are useful in the same way that rehypothecation is useful - capital efficiency. The history of financial markets is humanity’s attempt to squeeze out more utility and return per unit of capital deployed. Restaking and LRTs do just that, but as always, there’s a tradeoff. And the tradeoff for rehypothecation has, and always will be, increased fragility.

Yesterday, we got a small taste of that fragility when ezETH depegged over something so hilarious but also so innocuous - community gaslighting via chart crime. The pie chart put off ezETH holders, and coupled with the fact that withdrawals of ezETH are not yet possible, ezETH depegged from ETH bigly and remains at a 3-4% discount as of this writing. As the founder of Parsec Finance points out, the depeg led to a string of liquidations and bad debts across numerous protocols.

While the impact of the ezETH depeg seems to have been ultimately contained, we’ve barely tested the waters of restaking, and VC and onchain activity tells me there’s plenty of demand for more restaking/rehypothecation protocols. What happens when the restaking market is twice as large? With twice the rehypothecation loops and dependencies?

Suilend, a project from Rooter (founder of Solend on Solana), has increased its rewards program. Lenders on Suilend can deposit SUI, USDC or USDT and earn a share of over 400k SUI over the next week. 

Suilend is positioning itself as a core primitive in the Sui ecosystem. The project has steadily increased deposit limits over time and has already amassed over $35 million in TVL. And it’s clear that Suilend is shipping. The project sports a built-in bridge that makes bridging from Ethereum, Solana, Base, and other chains a breeze. 

After depositing into Suilend, it might be wise to borrow some SUI and liquid-stake that into Aftermath Finance to receive afSUI to boost rewards potential.

Sui’s tech is a force - the Move programming language is becoming increasingly popular, the network has handled 1000s of TPS with ease, and its zkLogin onboarding is incredibly smooth. As the Sui ecosystems matures, it is not improbable that Suilend and Aftermath become core primitives in Sui DeFi.

Perpetual futures stand out as one of the most dynamic segments within DeFi, characterized by constant innovation, whether that be through pre-market futures or access to community trading vaults. Despite this, perp DEXs currently constitute less than 2% of the total crypto perp volume.

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

The DOJ charged the CEO and CTO with a count of conspiracy to commit money laundering and a count of conspiracy to operate an unlicensed money transmitting service

The iShares Bitcoin Trust saw zero flows Wednesday, according to Farside Investors, after seeing $15.5 billion enter the fund in its first 71 days

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.