šŸŸ£ Social tokens look like sports gambling

The ETH ETF might be as early as late June/Early July

Author

ryan connor
May 30, 2024

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

  • Blackrockā€™s ETH S-1 update

  • Bidenā€™s crypto pivot intensifies

  • Vanguard is still not convinced

  • Social token legitimacy

Equities are down this week as rates ticked a little higher after bottoming mid-month. BTC is hovering around $68k and ETH around $3700. Memes ripped higher yesterday but have mostly erased those gains. 

The past 24 hours saw positive ETH ETF and political developments. 

Weā€™re getting more color on the potential ETH ETF launch date. Blackrockā€™s recent update to its S-1 filing points to an end of June or early July launch according to Eric Balchunas.

The Biden Admin continues to pivot on crypto - there are reports that the Biden team is seeking guidance from key stakeholders in the crypto industry. 

Vanguard is still not sold on crypto, however, despite their incoming CEO being instrumental in Blackrockā€™s IBIT launch. According to the company, crypto products donā€™t fit in ā€œa well-balanced, long-term investment portfolio.ā€ 

Canā€™t win ā€˜em all. 

The most interesting development over the past 24 hours, however, is that celeb coins are back. 

Rapper Iggy Azalea launched a coin and engaged with the crypto community via Twitter/X spaces (which I heard was actually pretty impressive). Caitlyn Jenner launched a coin on Solana and has since gone multi-chain. Cobie and Ansem had a back and forth about celeb coins, and you can take a walk down memory lane of celeb coin rug pulls here if youā€™re so inclined. This is not financial advice.

There are some obvious negative takes when it comes to celeb coins and social tokens. Itā€™s all a grift, fans will lose money, itā€™s a bad look for crypto, these are D-list celebs, etc etc. The optimistic take is that crypto interest is compounding and going mainstream, and meme, social, and celeb coins are new products uniquely enabled by crypto rails that have a large addressable market. 

While the celeb coins weā€™ve seen are obviously imperfect today, I am a big believer in the latter narrative - thereā€™s actually something here, and itā€™s here to stay. 

First, if you have permissionless financial rails where anyone has the ability to launch arbitrary units of value from the comfort of their mobile phone, itā€™s going to happen. From that, it doesnā€™t surprise me that, in a time when the gambling industry is outpacing GDP growth, people are having fun trading funny pictures and social assets.

Meme coins and social tokens reduce the mental friction associated with risk taking while simultaneously increasing fun. Want to start a side hustle? Thatā€™s really hard and requires planning. Invest in the stock market? Now you have to learn the difference between earnings and cash flows. But meme coins and social tokens? Trading these things is inherently hilarious and if I lose 100 bucks while breaking balls with my buddies thatā€™s still a net positive outcome. 

If I were to guess, over 90% of the males in my network engage in some form of sports gambling. They all lose money net net, so thatā€™s obviously not why they do it. They do it for social entertainment. If they win, they take home a little extra cash, brag to friends, and laugh about how they should have wagered more. If they lose, they treat it as the cost of doing business, they self-deprecate with their buddies on how bad we all are at this game, have a good laugh, and bet the next thing. 

DraftKings, Fanduel, and cultural/sports media company Barstool Sports are prime examples of this megatrend. The former two have gained massive traction over the past decade because they eliminate the mental friction associated with risk taking while pairing it with entertainment. The latter partly by capitalizing on the social aspect of gambling - and that fact that betting and losing money with friends can be hilarious for many.

The college football, DraftKings, Barstool Sports combo is quite similar to crypto, DEX Screener, crypto twitter, no?

ā€“ Ryan (X:@_ryanrconnor | Farcaster:@ryanconnor)

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Solana leads in stablecoin transfers, adds PYUSD

Source: Artemis

PayPalā€™s stablecoin is coming to Solana, where users can onramp to Solana with PYUSD via Crypto.com, Phantom and Paxos.

This is another big win for the ecosystem, with Solana seemingly dominating both sides of the bell curve this cycle. The chain is very much the leader in memecoin trading, and, per Artemis, stablecoin transfer volumes have absolutely exploded.

Itā€™ll be interesting to see how PayPal attacks this market, as PYUSD has a long way to go. USDC and USDT account for over 95% of stablecoins on Solana.

Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

Although these are strong narratives, the key driving force behind crypto gaming will likely be financial incentives through tokens, similar to how SocialFi apps flourished under financial incentives and tokenization (Friend.tech tokenized communities and personalities while Farcaster benefited greatly from DEGEN and Frames).

Pump.fun reminds us that crypto casinos can still be extremely profitable

Why has crypto and Web3 so far failed to live up to Satoshiā€™s vision ā€” and what will it take to deliver on the industriesā€™ promises?

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 Firmā€™s Financial Disclosures.