🟣 The Founder and The User

As our very own Westie Capital put it, this could potentially be one of the biggest fumbles of this cycle.

Author

Boccaccio
April 11, 2024

đź‘‹ GM.

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

  • MarginFi drama

  • SEC serves Wells notice to Uniswap

  • Circle and Blackrock launch a partnership

If you were online last night (US times), you would’ve witnessed a massive PR mishap from the MarginFi founders. Following a series of tweets from SolBlaze, a Solana liquid staking protocol, that outlined how MarginFi has stopped distributing BLZE rewards to users, and has instead held on to them in their treasury, the MarginFi team decided to air out their grievances on the timeline, which ended with their founder discussing their sexuality, and resigning from their position.

As our very own Westie Capital put it, this could potentially be one of the biggest fumbles of this cycle. To be honest, I always thought the MarginFi product was good (assuming that it is safe, and there are no smart contract related issues). However, over the past few months I think the team has overplayed their hand, at points ridiculing and bullying their customers. We saw a similar scenario play out with the StarkWare team, where one of the leading team members took it to Twitter to call their customers “e-beggars”.

The case of the crypto-protocol founder is a difficult one. On the one hand, I feel for most of them. If you have ever hopped into the Discord server of a protocol without a token, you’ve likely seen the masses bombard team members and mods with questions regarding the drop date for the token constantly. When they don’t get what they want ($, and lots of it), most users often cuss out the mod team, the founding team, as well as all others involved.

On the other hand, the clearest use case for crypto is tokenization. There’s a gentle balance between a team teasing airdrop farmers and a team farming airdrop farmers. You can only post so many updates about your roadmap, points epoch 16 and how your product is curing EVERYTHING wrong onchain, before you start getting berated. In addition, protocols should understand that the relationship they have with users/airdrop farmers/sybils is mutualistic. The protocol gives users “free” money, and the user gives the protocol boosted DAU, volume and fees, so that the protocol can raise at a higher valuation. If any side upsets the balance, it doesn’t work.

Apart from MarginFi, the market has not been particularly exciting today. We received two critical pieces of news over the past few hours. First of all, Uniswap got served a Wells notice by the SEC. I will not pretend to be a legal expert, but many founders across the space have spoken out and stated that they’re not surprised by the action. I am unsure of what the SEC is attempting to accomplish, but will be watching what happens clearly. From what I’ve understood, a positive outcome for Uniswap would mean a lot more regulatory clarity for US-based founders. Aside from Uniswap, we also saw TAO get listed on Binance, and Circle, launch a partnership with Blackrock that allows BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) holders to exchange their shares for USDC with Circle.

— Boccaccio (X: tripleboccaccio | Farcaster: boccaccio)

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ENA Funding Rate

Source: Velo Data

ENA (Ethena’s native governance and utility token) has had significantly negative funding rates over the past few weeks, reaching -446% at the extremes.

This is following Ethena’s announcement that users can boost their ENA earnings for Season 2 of their Shards campaign, where users can earn ENA through the protocol and USDe, by staking ENA tokens. This has led to many people not wanting to take on price risk with their staked ENA tokens, who have decided to short ENA on derivatives.

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.

Solana current design is causing users’ transactions to be displaced or dropped. Until further solutions mature, we do not see the appetite to add additional risk at present; however longer term, we think the market will eventually look past these idiosyncratic headwinds and believe SOL is still a top candidate for outperformance throughout this cycle.

Circle’s new smart contract to allow holders of BlackRock USD Institutional Digital Liquidity Fund to redeem shares for its stablecoin.

Bitcoin developers are looking at ways to grow the ecosystem amid a resurgence of interest in innovation and development.

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.