YeruiZhang

This weekend's roadside report:

1. The recent crash of currencies is mostly related to the strange holding structure of contracts + insufficient spot liquidity + large sell-offs in a short period of time. Project parties? Market makers? Who is the puppet master is Schrödinger's puzzle. But for most projects that want to work again after hours, it will be difficult; otherwise, the outcome will be clear within three days, or it will be a lifelong issue.

2. Binance Alpha is crazily sending offers to projects, and there will be more strange entities coming up next. Additionally, a new form of IDO will emerge, running parallel with the old forms. This model mainly focuses on small-cap projects, capturing market share from lower-tier exchanges.

3. Now, top projects want to skip Alpha and go directly to spot and contracts to have more pricing space. This will be the focus of the upcoming coin listing game and will also present potential arbitrage opportunities.

The general situation is that Koge and ZKJ together created a large pool for everyone to trade. Koge suddenly switched to ZKJ without any warning, causing Koge to plummet, and then ZKJ was crashed to U, leading to a significant drop in ZKJ... Koge's large holders became the only winners.

Additionally, what's even more interesting is that this wave 'coincidentally' caused massive long positions on Bybit to be liquidated, which amounted to 100M. The counterparties of this long position made a fortune; who is that unlucky guy? And who is that lucky one...

It is known that Brother Sun invested 2-3% of WLFI in 1.5B. If WLFI really reaches 1U, then Brother Sun will make a profit of 2-3 billion US dollars... it only takes six months from early November last year to now.

Do you think Brother Sun will share it with you?

After 21 years of Dydx opening at its peak, many "executives" from exchanges in 21-22 said their VC coins would benchmark against Dydx and aim to take it down, but in the end, what came out was Gmx...

In this wave, a bunch of "well-connected" on-chain Dexs claim they want to surpass Hyperliquid, so the question arises, what kind of strange and unique things will come out?

To be honest, having institutional backing and big brother support in the Perp Dex space is relatively useless. Hyperliquid's contemporaries, Drift and Aevo, are backed by top investors and major firms, and the later Paradex is supported by market makers and a large network of Pro traders. Those who should clock out still need to clock out.

Running a Perp Dex is a business that requires a lot of skill points; if you don't have a solid foundation, everything else is in vain. Liquidity, market depth, user experience, etc. — not a single one can be lacking. Having experienced the current popular ones, it seems they are still far from meeting expectations.

Not to mention mainstream coins, the liquidity of altcoins has already hit rock bottom...

1. Setting aside the new lows in trading volume for market makers, there are no buy or sell orders on the order book, so prices naturally decline slowly.

2. Good news is not being absorbed, the buying orders on the exchange only last for thirty seconds with bots, and once new coins are listed, they start to decline.

Regardless of whether it's rising or falling, the cycles for altcoin markets have shortened significantly; if you can't catch it, it's time to clock out...

If a project has a KOL round with TGE unlock and also conducts a Mindshare airdrop with Kaito, then there are only two possibilities:

1. The airdrop basically all goes to work
2. The opening price of the coin goes to work

If this project is also looking for channels to spend money on exchanges everywhere, then the project party definitely wants to be the fastest one to run away...

My guess is that the ban is related to issues like copyright... for example, AI16Z infringing on A16Z... and possibly Labubu's token infringing on Labubu, and someone has filed a lawsuit or something... and then everyone tweeting about it gets implicated as well.

It definitely isn't Gmgn and KOL participating in money laundering, that's too far-fetched.

Let's talk about a few directions that look promising and those that do not for the second half of the year～

1. Promising prediction markets, AI oracles + permissionless predictive products = a new form of AI-driven casino, matching the needs of gamblers and money launderers.
2. Promising the Moand ecosystem, where the top founders taking the wildest paths can actually break the deadlock.
3. Promising the new version of the economic model, which is more complex and random, e.g., more airdrop allocations paired with task unlocks.
4. Promising permissionless, stable DeFi/RWA yield layers.

1. Not optimistic about meme coins backed by market makers, they are all crashing one after another.
2. Not optimistic about reinventing the wheel in ways that do not align with the fundamental conditions of the chain, such as doing RWA on BSC or Dex on Sui.
3. Not optimistic about AI workflows and Multi AI in Crypto, the situation changes too quickly to keep up, taking one step ahead does not guarantee success, and it demands too much from team capabilities.

Finally, the quality requirements for projects have decreased; as long as it looks passable, the corresponding shell premium is also decreasing, and the demands on project creators' pockets are higher. With the elimination of market makers creating opening prices, retail investors flocking in, perhaps everyone is truly competing on whose product is used, establishing a reasonable connection between the product and the token～

Let’s discuss a few promising and unpromising directions for the second half of the year～

1. Promising forecast markets, AI oracles + permissionless forecasting products = a new form of AI-driven casino, matching gamblers and money laundering needs.
2. Promising the Moand ecosystem, where the top founders taking the wildest paths can break the deadlock.
3. Promising new versions of economic models, more complex and more random, e.g., more airdrop allocations paired with task unlocks.
4. Promising permissionless, stable DeFi/RWA yield layers.

1. Not optimistic about meme coins backed by market makers; they disappear faster than you can clock out.
2. Not optimistic about reinventing the wheel in ways that don’t align with the chain's fundamentals, such as creating RWA on BSC or Dex on Sui.
3. Not optimistic about AI workflows and Multi AI in crypto; the pace of change is too fast to keep up, taking one step doesn’t guarantee success, and the demands on team capabilities are too high.

Finally, the quality requirements for projects have lowered; as long as they pass muster, that’s enough. However, the expectations for project teams' financial backing are higher. Without market makers creating opening prices, retail investors flocking in, perhaps we are truly competing on whose product is actually used, and there is a reasonable connection between products and tokens～

The roadside news continues to broadcast

1. Last night's HPV drama was just the tip of the iceberg; there are quite a few in the crypto space with issues down below, including some well-known figures, but thankfully, I haven't heard of anyone having AIDS. Besides that, smoking marijuana is quite common; those who understand, understand.

2. Recently, a new batch of projects has come out with secondary 'pump' rounds, offering a 30% discount on the current TWAP, with a lock-up period of about 6 months. The project parties are gradually realizing that doing KOL rounds is not as effective as getting VCs to buy directly.

Occasionally writing some abstract things I heard from the roadside society～

1. Market Maker A accidentally created two impressive BSC memes, and Market Maker B, envious, created a copycat project, combining the two mechanisms that caused a hit. However, Market Maker B’s projects always have a very high opening price, and their strategy is to release good news and then sell off before quitting. The result is that everyone knows there is good news, but when it comes out, it’s likely just a race to see who can run faster compared to the operator.

2. Market Maker C has several shells of Binance, but the money on hand isn’t enough to maintain every project, so every time a new project is launched, it means an abrupt end for the old projects.

Sahara is a project with great potential. Initially, they were called QuestLab, born around the end of 2022 or early 2023. As the name suggests, the project was originally focused on decentralized data labeling Quest task mechanisms and a decentralized Workflow system. Back then, the valuation was very low, the team had a concept, comparable projects (many similar companies in Web2), and a solid team (Sean is arguably one of the most academically capable and influential young professors in the Crypto startup scene). Thus, they secured funding from Polychain, Samsung, and a number of Asian Web2 VCs.

Then, in early 2024, the narrative of Crypto AI gained traction, leading to the emergence of many big players, including Sahara, Sentient, Ora, Myshell, and others, all of which were very popular at that year’s ETH Denver (Denver is basically the annual trendsetter for the VC circle). At this point, the project split into two factions: one was focused on building large models on-chain, utilizing cryptographic technology and matching AI programming primitives. The other side was about applications, doing whatever was trending in Web2 and just adding a token incentive mechanism. Sahara happened to stand in the middle; on one hand, the value of data labeling in the AI era was fully recognized, and on the other hand, Professor Sean and his team's AI capabilities were still quite strong, able to construct a system to run AI on-chain, needing to launch a chain specifically for AI use. Thus, Sahara's second round valuation soared, with institutions continuously participating, ultimately achieving a threefold oversubscription.

After that, there was the much-anticipated star endorsement and the testnet whitelist phase. There’s not much to say about this part; it was just a competition, and then we fast-forward to this public offering.

The public offering price is 600 million, and the bullish points are quite simple.

1. Binance's favored child in AI-type projects, the last deeply supported AI project by Binance, Vana, opened at 3.5 billion, and now it’s still over 700 million, so it’s definitely profitable.
2. The Crypto AI track is the last major area where VCs are pouring in money; after this, VCs won’t have the funds or similar market opportunities to support another such track. Sahara is also the first major valuation debut in this wave of Crypto AI projects in 2024; if it performs poorly, the projects behind it will likely have to shut down, so while this could incur losses, they shouldn’t be too significant.
3. The narrative of Layer1 Infra never dies in the crypto space; as long as it doesn't launch too poorly, there will definitely be people betting this could be the next Tia, and if the price is right, there will still be secondary market buyers.

There’s no need to elaborate on the fundamentals of the project; I believe in the current market environment, everyone is too busy to research what it actually does, so the most direct way to pitch it is:

A top-tier Crypto AI project comparable to Wld within the Binance ecosystem, just go for it and you’ll profit.

In my memory, Brother Sun was also a shareholder of Circle, and the proportion was not small... Indeed, most profitable ventures are inseparable from Brother Sun.

Lagrage's project has been quite troubled, originally working on a semi-ZK bridge (technically speaking, it is not a bridge that relies entirely on ZK to ensure trust). Later, it was discovered that this business was overshadowed by Polyhedra, and after several major players in the bridge track issued tokens, the market value wasn't very appealing, so they shifted to become an ecosystem project for Eigenlayer. Indeed, they were among the first to launch on the mainnet AVS, and the volume of Restaking was also considerable, but they were outpaced by Omni, which launched their tokens first and gained an advantage, subsequently leading to the collapse of the Eigen track.

Then when AI became popular, they pivoted to create an AI ZK verification layer. Since the end of last year, they have been in discussions with exchanges but were unable to clarify things, during which they also heard about high-priced channels from Bybit but missed the opportunity at the beginning of the year, leading to a delay until now to launch.

Additionally, when discussing this VC round project, I noticed the team consisted of a Yale professor along with a father-son duo starting the business, with the father as COO and the son as CEO, which is relatively rare in the industry.

I remember chatting with Ethena some time ago, curious if, with their TVL exceeding 6B, they would shift their focus towards asset security rather than absolute yield. The answer I received was that currently about 50% of the assets would choose to temporarily not adopt strategies and would expand their business to different types of asset forms, with asset security always being the top priority. To this day, Ethena resembles an asset management protocol more than a Quant Fund, so users with stronger yield expectations will choose alternative products.

Resolv currently offers a stablecoin yield of 14.4% and an insurance pool yield of 26%, which is above the market's risk-free yield level. The logic of the protocol is quite simple: all assets are deployed in ENA, plus an insurance pool that bears risks and takes 30% of the returns. Protocols of this kind of arbitrage model seem simple, but they are actually as challenging as running a Quant Fund; every bit of yield difference reflects the trading abilities of different teams. Similarly, teams with stronger trading capabilities can incorporate more modules into their strategies, including a wider range of asset classes (BTC, ETH, and even altcoins), lending, LP strategies, etc., allowing them to maximize their returns under controlled risks.

With the expansion of the Crypto market, especially now with convenient OTC and the relaxation of banks' restrictions on Crypto asset inflows and outflows, risk-averse funds have more opportunities to enter the Crypto market for wealth management, creating opportunities for more straightforward DEFI yield solutions. Due to the high volatility and cyclical nature of the Crypto market, the yields of low-risk strategies will be amplified, and teams with different risk appetites and varying strategy complexities will have business opportunities. Under this premise, ENA chooses to expand outward, seeking different asset forms and building product lines. Resolv, on the other hand, chooses to focus on enhancing yields and adopts the form of an insurance pool to price risks.

As the total supply of stablecoins exceeds 250B, regulations relax, and a large number of cross-border payment companies enter the crypto space through OTC, we have already seen a wave of yield-seeking capital flowing into Defi protocols, boosting Ena's TVL. So with Resolv's launch and the subsidy flywheel turning, will there be a wave of funds transferring over to create a hype?

Most of the bosses and core employees of large market makers and exchanges live in Singapore. Last year, this group was not granted PR, and this year, there was a direct order to expel them... Life is really tough.

Now let's see how Wintermute will fare, after all, they only took off after moving to Singapore last year. This place is considered their lucky spot, and moving away would be a significant loss for them.

In fact, the Pump token issuance has already been delayed three times... just like Kanye's token issuance... everyone wants to launch at the best timing, but determining the best timing is quite mystical.

Currently, the actual situation is that there is indeed an institutional round (this has been going on for several days), and there are plans for an ICO, but it's uncertain when that will be.

As for the impact on the market, I am first quite curious whether the ICO can be fully subscribed...

Recently, I have taken over several new coins because I know the team and believe they are genuinely working, feeling that the prices are undervalued. But unfortunately, none of them are making a profit... all of them have closed down.

Now the state of new coins has returned to the situation from August to October last year, where they fall immediately after going live, dropping until the team starts to support the price, and if the team has no money to support, then it goes directly to a shutdown.

The root cause is still the mismatch among price, value, and volume. How to explain this?

Kaito and Virtual's launchpad have explained the destination of trading fees. The essential reason is that the new generation of Dev profit model has shifted from primarily selling coins to primarily earning fees from the pool.

Under Virtual's launchpad system, the Virtual token is used as the trading pair, and a portion of the fees earned is distributed to the project parties, which is a great way to give back to the entire builder system. Interestingly, projects on Virtual require a longer build cycle and lack continuous means to gain exposure, relying solely on product success. Therefore, they chose to launch on Base instead of Sol, encouraging users to lock their tokens, which did not maximize leverage fee income.

On the other hand, Kaito's projects inherently come with exposure, so they decided to share fee income with Skaito stakers, incentivizing collaboration between stakers and Yap users, while generating long-term stable value capture for Kaito. Higher exposure - more transactions - more fees is the foundation of this flywheel.

For projects on the Kaito Launchpad, the perspective of distributing tokens to Yappers is not based on expecting diamond hands (I don’t believe most people won’t sell), but rather to replace the value of Yappers from price performance to trading volume generated by attention, which seems much more reasonable.

Upbit's approach to listing coins is like tutoring a prince, as it requires a specific Korean won pair for a coin, and to avoid outside gossip, it includes two BTC/USDT pairs.

In other words, it's the difference between whale players and ordinary players in the game...