Weekly Alpha #28 - 2024 Crypto Narratives 🔥

Latest DeFi Alphas Delivered in a Concise Newsletter.

Dec 15, 2023

Welcome to the latest edition of Weekly Alpha.

Every Friday, I deliver insights on the cryptocurrency market, emerging projects, macroeconomic trends, and DeFi directly to your inbox.

In this edition of The Weekly Alpha:

🗞️ Weekly DeFi News Digest
🔥 My Favorite Crypto Narratives For 2024
📈 Market overview

Your Weekly DeFi News Digest 🗞️

In this section, I highlight the week's most impactful DeFi news. This way, you can bypass the chatter on Twitter and concentrate on the essential updates.

Tether’s USDT Market Cap Hits New Record as Stablecoins Recover
Starknet Unveils Token Launch Plans
GFX Labs is Deploying Uniswap V3 to Bitcoin Sidechain Rootstock
Coinbase Lists SEAM Token as Airdrop and Liquidity Mining Program Begin
Celestia to integrate with Polygon CDK for data availability in 2024
Synthetix Tokenholders Vote To End SNX Inflation
Supply chain attack targeting Ledger crypto wallet leaves users hacked
LayerZero Launches Testnet For Newly Announced V2 Iteration
Approval Phishing Scams Raked In $1B Since May 2021
LayerZero Launches 40+ Testnets For Newly Announced V2 Iteration
Ledger says attacker conducted phishing attack on former employee
Nirvana Finance hacker pleads guilty, forfeits $12.3M

My Favorite Crypto Narratives For 2024 🔥

For this bull market, I aim to concentrate my portfolio on certain narratives that I believe will serve as the missing pieces for integrating mainstream users into the ecosystem. Bear markets are periods for builders; we manage to solve complex problems when the market is calm and only the true believers remain. It is during these times that we can witness the emergence of new winners.

Data Availability 📊

After Celestia's rise, I delved deeply into the DA (Data Availability) sector. There are several promising solutions currently in the market or soon to be launched, such as EigenDA. I believe these will play a crucial role in enabling Rollups to scale effectively in the future, particularly for publishing and making transaction data available.

I'm closely monitoring Celestia's developments. They have been excelling in terms of development and token price performance. The staking of their token is contributing to this success, although I'm unsure if its high value is sustainable. Nonetheless, it's undeniable that almost no one expected TIA to reach such high levels.

I also hold the view that the potential airdrop from Eigen Layer could be one of the largest in 2024, particularly if market conditions are favorable at the time of their token launch. Currently, you have the opportunity to use your LST tokens to accrue points on Eigen Layer.

Layer 2 Solutions 🏎️

With the upcoming Ethereum Cancun upgrade and the rise of layer 2 infrastructures, this narrative is definitely on my radar.

Looking at centralized exchanges building their own layer 2s on top of Ethereum, it's clear why this trend is significant. I find it bullish that these exchanges are likely to focus heavily on user experience to seamlessly onboard new users and educate them about layer 2s, potentially shifting a significant amount of value from off-chain to on-chain.

Another important aspect is the probable use of tokens to decentralize sequencers in the long term. Currently, they're being used along with governance to incentivize users to engage with protocols through retroactive public good funding grants and incentives. This approach has shown great success on platforms like Optimism and, more recently, Arbitrum. Starknet also plans to use their token to encourage developers to build using Cairo, which is effectively capturing value.

Account Abstraction And Chain Abstraction ⛓️

This narrative is definitely underrated. Account abstraction and chain abstraction are set to significantly enhance the on-chain experience. For instance, consider Avocado Wallet's innovation with a unified USDC gas tank – it's a game-changer for users. Essentially, you can refill any amount of gas using USDC and utilize this gas across any chain. This means you don’t need the native token of a specific chain to pay for gas fees, and you can interact with any chain using this gas tank. For example, if you refill gas on Arbitrum, you can seamlessly swap on Optimism.

We're likely to see more solutions like Infinex from the Syntethix team, which will probably leverage account abstraction.

I'm also working on a project that utilizes Account Abstraction, aiming to enable users to batch transactions and automate DeFi vaults, thereby enhancing user experience without the need to manage an External Owned Account (EOA)

Weekly DeFi Market Update 📈

Decentralized Finance Ecosystem: Latest Developments

Stablecoins On the Rise 📈

Increasing amounts of capital are being deployed in the market, and we are witnessing a rise in stablecoins across multiple blockchains, which historically has been a very bullish indicator preceding a bull market.

Gas Fees Paid By Users ⛽️

The correlation between user-paid gas fees and significant activities on Optimism and Arbitrum is notable. This month, we've observed a slight increase in activity across both networks. However, at the moment, Arbitrum is still leading the rollup wars in terms of activity.

Daily Cumulative Fees In The Past 7 days

When examining the broader ecosystem, Ethereum still dominates in terms of daily cumulative fees, followed by Bitcoin and Tron.

Bitcoin has recently seen a rise in activity, primarily due to the emergence of ordinals and BRC-20 tokens.

Daily Active Users: Synthetix vs GMX 🤺

If we compare the daily active users of Synthetix and GMX over the past 7 days, we can observe a correlation, but GMX is clearly leading in this aspect. This doesn't necessarily mean that GMX is a superior platform, but it does indicate a notable demand for leverage on GMX, partly due to their tokenomics model.

Conclusion

This newsletter has been more focused on metrics rather than Alphas, but I believe it's crucial to keep an eye on these metrics and gather data to best position ourselves for the upcoming bull market.

While the market is rising, I remain cautious since there aren't many newcomers and we are still in a niche. In the long term, I foresee chain and account abstraction making liquidity merely a backend feature for fintech apps, which will be a major step towards real DeFi adoption. However, I also believe that permissionless DeFi is here to stay. Even with potential regulations aiming for stringent KYC, as an industry, we have the capacity to maintain our sovereignty. Technology is challenging to regulate effectively because it evolves faster than politics.

How are you positioning yourself for the upcoming bull market?

Yannis' DeFi Digest

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