Crypto is a joke
As long as the world thinks crypto's a joke I’ll know we’re early.
Zerion is Mission Control for Web3. Trade tokens, transfer across chains, and display NFTs.
Dear Bankless Nation,
Crypto embarrassed itself again this week.
But at least this time it was entertaining.
You know it’s always the silly crypto news that makes the headlines. Not the important things. The bizarre. The sensational. I think this gives the rest of the world a distorted view of what’s really going on in this movement.
To be fair the big crypto story this week was impossible not to talk about.
When it turns out that one of the largest cryptos heists of all time was committed by a struggling influencer and wanna-be-rapper, it’s hard to stay crypto seriously.
I mean, what am I looking at?!
Let me back up. Earlier this week, husband and wife duo Ilya Lichtenstein and Heather Morgan were arrested for stealing $3,600,000,000 worth of Bitcoins from a 2016 Bitfinex hack.
To outsiders looking in, crypto is a bizarre and scammy industry full of bad actors. The massive social potential keeps getting overshadowed by incredible levels of cringe. Remember this?
Do you know what should have been bigger news this week?
Whitehat hacker Jay Freeman discovery and disclosure of a massive Optimism bug that would allow attackers to mint an arbitrary number of tokens.
Chainlink continuing to pave the way with its Cross-Chain Interoperability Protocol, to create a safer and more security multi-chain ecosystem.
You have to sift through the stupidity on the surface to see the hidden genius.
The brightest minds are working in this space. Academics and PhDs, dot-com era builders, FAANG executives, economic researchers, ambitious college dropouts, and talented engineers are all flocking here because they are excited to play in the sandbox of opportunity that Web 3 presents.
On the surface level crypto is synonymous with hacks, criminals, million-dollar JPEGs, and an environmental crisis. But when you peel back the layers, you see the signal. The brilliant minds working together. The novel experiments that create equitable outcomes. The values that keep us aligned.
Most people don’t put in the work to see past the shenanigans.
That’s our alpha.
We dig past the absurdity to see the true potential for technology.
As long as the world thinks crypto is a joke I’ll know we’re early.
Here’s what’s lined up for next week:
We talk to Rep. Tom Remmer on Crypto in D.C.
Our guide on how to get started in DeFi - 2022 Edition
A deep dive into the veTOKEN model and why everyone’s adopting it
Have a 🪓 weekend,
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Recap for the week of February 7th, 2022
ACTION RECAP 📚
More Users: We are onboarding people at a faster rate, thanks to every successful L1 ecosystem.
More Private Keys: Every new user that newer blockchains bring into crypto means that power tilts further away from institutions and towards individuals.
More Aggregate Decentralization: Regardless of how decentralized alt-L1s and Ethereum are, they move the needle compared to the current systems.
Even if they’re not decentralized as we would like, they’ve still added more decentralization world and that’s something to celebrate.
More Anti-Fragility: Alternative L1s allows us to test all of the ideas at once. Multiple approaches increase the certainty some experiments succeed.
More Development: With a larger pool of potential users and lower costs of experimentation on alt-L1s, crypto is producing more developer activity.
Many of Ethereum’s most promising layer 2 (L2) scaling solutions will launch native tokens over the next couple of years. What we do on these L2s today will affect our token distributions of tomorrow.
There are three concrete ways for the average user to prepare for L2 token season: (1) Transacting on L2s, (2) Using their apps, (3) Using bridges
Explore some bridges and apps on zkSync, Arbitrum, and Optimism
DAO treasuries have exploded. The top 50 DAOs are worth $15B. But most of this capital is in native tokens, which are illiquid compared to treasury size.
DAOs are deploying capital. Meaning that during bear markets, they will need to constrict native token spending… unless they diversify to stables.
Diversifying stables allows them to (1) De-risk the treasury, (2) Manage a predictable budget, and (3) Pay contributors.
DAOs can diversify by (1) Earning revenue in stablecoins, (2) Selling native tokens for stablecoins, (3) Forming Strategic Partnerships, (4) Borrow against native tokens, and (5) Collaborate with stablecoin issuers
Yields on L2s are juiced up for a few reasons: (1) Gains on L2 > L1s, (2) Transacting on L2s is cheap, and (3) Activity on L2s could qualify you for airdrops!
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Optimism (5-500% APYs) - Synapse, Barnbridge, and more for Bankless Premium Subscribers!
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.