Ecosystems
Which is the next hot ecosystem?
Solana has been on a tear for the past few months.
With so many Alt Layer 1s and ETH Layer 2s, you might wonder who's next.
Here are a few chains that I think have the potential to explode next quarter.
#1 Base
This is Coinbase's Layer 2, and people wonder if it could be the "BNB" of the west.
Let's look at some numbers:
- DEX volume on Base has increased from ~$70MM to ~$440MM.
- Base's revenue has shot up from ~$110k in the last two weeks to ~$2.5B.
- In February, TVL constantly hovered at ~$400MM. Right now, it has more than a billion in TVL.
- And many more metrics. You can view them in Artemis.
Coinbase's massive user base makes it easier for Base to attract retail due to lower friction. They offer free and one-click bridging to Base. This positions Base well to capitalize on any catalyst.
On March 13th, Ethereum implemented the Dencun upgrade, which massively reduced the costs associated with rollups. Users now pay <$0.01 for many transactions.
As users and capital flowed in, a memecoin season started on Base.
Strengths: Easy onboarding due to Coinbase and cheap transactions.
#2 Near
Near is an alt-L1 built with scalability in mind. They're already seeing the benefits of sharding and constantly improving scalability.
Near has been gaining a lot of momentum for several reasons:
They launched Chain Signatures. This allows Near accounts to sign transactions on any blockchain. With your Near account, you can easily control your wallets on Bitcoin, Ethereum, Cosmos, and so on.
The Near team has an AI-background. The co-founder, Ilia, has spent an impressive 10+ years as an AI researcher at Google.
He even gave a talk with Jensen Huang (Nvidia's co-founder) at the GTC summit
This places the team in a really good position to take advantage of the AI-narrative. At least, the market is going to believe that. And this is being reflected in the price:
- On March 6th, $NEAR was at ~$4. But it has since almost doubled in price. It's now trading at around ~$8.
- Near's TVL on March 1st was ~137MM. But right now, it has crossed almost 300MM.
- While there isn't a sudden, gigantic increase in other metrics, these are also solid. You can review them here.
Strengths: Riding the A.I. narrative
#3 Fantom
On March 1st, $FTM was at around $0.5. Since then, it has more than doubled. Now, it is trading at ~$1.03. There are several reasons behind it.
The upcoming Sonic upgrade is the primary reason. It is said to massively improve the performance. It'll have 2k+ transactions, single-second finality, and more. You can read more about it here.
Currently, Solana is the top dog of ultra-cheap, super-fast monolithic L1s. The Sonic upgrade will give Solana solid competition. And it might become the go-to Beta token in this category.
There is also a big marketing push around the launch. They're saying there'll be multiple airdrops alongside the launch. They also probably partnered with several big names in the industry. Those announcements will create even more hype for $FTM as they come online.
Here are some metrics
- The TVL increased from ~$80 million to ~$150 million in March.
- On March 10th, their DEX trading volume was only $10 million .It hit $116 million on March 19th.
- From March 1st to 20th, the fee also shooted up from $7.9k to $141.4k.
- However, these numbers have been trending down after the local highs. But once the marketing surrounding the launch gets stronger, it'll shoot up again.
Strengths: Sonic Upgrade, "cult leader" in Andre Cronje, Airdrop push
#4 TON
TON stands for The Open Network. This L1 is associated with Telegram, which has ~800M monthly users. They have a well-developed ecosystem as well.
The metrics indicate growth as well. In March, TVL has grown from ~$120 million to ~ $300 million. The volume has also increased. On March 23rd, it had >$104k in volume.
And, an upcoming catalyst can drive even more growth to the chain.
Season 1 of the Open League will start from April 1st. It is a community rewards program in which ~$115 million in $TON would be distributed.
This will attract a lot of attention and capital to TON. So, keep an eye on this ecosystem as well.
Strengths: Massive userbase in Telegram, rapidly rising metrics.
What's next?
So how do you profit from this? Well, I'm just shining a spotlight on the ecosystems.
Here are a few techniques you can try:
- Buy the native token on the chain.
- Evaluate the projects' metrics to find undervalued projects on the chain.
- Get exposure to the current meta on the chain. E.g., Base memecoins over the last week.
- Buy tokens for common sectors on all chains, such as DEXs, lending, and perp protocols. E.g., Aerodrome is a great candidate for the DEX sector on the Base chain.
While I'm sharing some great information, you should learn how to research on your own (so you don't have to rely on anyone).
If you're interested in learning how to become more systemic and organized, consider joining Double Your DeFi (sign-ups end tomorrow).
Sponsored By Radiant
Radiant is partnering with DeFi.app
Have you tried teaching DeFi to your normie friend? All you get is confusion and frustration.
Most people don't use DeFi protocols because of their horrible user experience. Radiant Capital is addressing this issue by partnering with DeFi.app.
Radiant Capital is the leading omnichain money market.
Last week, we talked about the upcoming launch of Radiant V3. This will introduce features such as one-click leverage reading, the Radiant Innovation Zone (RIZ), and dual emissions.
Just using Radiant can be profitable for you. The potential airdrops will pay for your costs.
- Radiant is integrated with LayerZero. Using Radiant can help you to quality for the $LZ airdrop.
- The Defi.app airdrop. I'll talk more about the upcoming partnership with them below.
Defi.app aims to bring the web2 user experience to web3. No more confusion about bridging or gas tokens. It will remove all the complexities of DeFi. Even your grandma will now be able to go degen.
Radiant will be the backbone of the many yield-farming opportunities on DeFi.app. With this partnership, DeFi.app users will become Radiant users as well. This will also improve key metrics, such as Total Value Locked.
Yield Farm Opportunity
Anzen Finance: Newest Yield in the Space
DeFi offers an incredible opportunity to put your capital to work. And it's always interesting to see how protocols generate yield.
I remember when all the "food" protocols were paying xxxx% in yield from printing tokens out of thin air.
And now Protocols have pivoted to try to create sustainable yield backed by revenue.
Now the space is full of opportunities to farm double-digit APYs. From Ethena to dYdx to plenty more protocols, this gives you access to an incredible 20%+ APY.
In the last few days, we've have stumbled upon a new exciting concept from Anzen Finance, which offers an 80.72% yield on stables!
They are taking an innovative approach to RWA DeFi, utilizing great yield sources from the private credit market.
Risk Warning: This is a newer protocol. The TVL is at $162.000.
This isn't a sponsored post - I have zero exposure or investment in the protocol. You mentioned you want more cutting-edge opportunities, so here it is :-).
Please do your own research before investing.
About the private credit market
Private credit, also called direct lending, is a type of loan provided by companies other than banks, such as private equity firms.
These loans are usually given to smaller or medium-sized businesses with a lot of debt that cannot get money through regular bond markets.
This kind of lending differs from traditional bank loans and is an alternative for these businesses.
Even though private credit is only a small proportion of all business financing, it's growing quickly.
How Anzen Finance works
From their website:
Anzen is a decentralized platform providing permissionless yield-bearing tokens backed by tokenized Real World Assets (RWA).
Anzen Private Credit Token is collateralized with secure, tangible, and value-accruing assets, offering holders a predictable income stream tied to RWA's performance.
They secure their loans with assets that yield a specific cash flow and also with qualified KYC-compliant investors.
How to start earning yield
All you have to do to earn yield is mint PCT, a yield-bearing token, on their website. Here are the steps:
- Log in with your wallet.
- Mint PCT by depositing stablecoins inside their protocol.
- Start earning yield on PCT.
I also spoke with the team who told me you will soon be able to wrap your PCT to wPCT to integrate with other protocols.
Where does the yield come from?
Their current lending yields $144,000 yearly. Divided by the current TVL, this will earn you an 80% APY on your stable.
Yes, the higher the TVL, the more you will be diluted. However, the team pointed out that they are willing to expand the lending offer.
This is how the team pictures the flywheel of Anzen Finance:
Additional Alpha from the Team
We spent a bit of time chatting with the Anzen Finance team. Some thoughts from our end:
- I can see how they are willing to make this product scalable and attractive to the masses.
- Their marketing is behind right now. A good product isn't always appreciated without good marketing.
- There are no public audits as of yet.
- The team is fully undoxxed (that is neither a negative nor a positive).
- I will keep an eye out for additional updates from the team.
Here are a few more things I learned by speaking with the team:
"Anzen is built by a team of credit investment experts with over a decade of joint lending experience. Since 2018, the team has been researching mechanisms to bring credit assets on-chain."
"We work with a traditional originator, which gives us access to US private credit assets with very low default rates."
"We've been working on Anzen for more than a year, launched on mainnet a few months ago, and are working on showing the community that you can get consistent yields for your stablecoins in RWA."
"Anzen is incubated by a family office investing in private credit using fiat for six years.
To solve the point that there is no institutional grade RWA open to permissionless users, we built Anzen as a platform where we can put our deals on-chain
1) We will only bring high-quality deals to Anzen that have passed strict criteria. We target a 12-15% APY range, which must be senior secured with real collateral.
2) Most deals are subscribed to by fiat. So there are fiat co-investors; it is not adverse selection where the worst deals are sold to Defi users."
Once again, invest at your own risk.
If you like articles that focus on newer protocols with potential, please reply and let me know (how else will I know?)
🚀 DeFi Catalysts
Frax Finance introduced the Singularity roadmap. It unifies all the different aspects of Frax into a unified vision and roadmap.
TrueFi revealed the plans for a lending platform. Users will be able to deposit TrueFi's T-bill token to borrow the platform's new TRI token.
Abracadabra launched MIMSwap. If you lock LP for 3 months, you'll get rewards like initial blast airdrop, USDB yield-enhancement, and so on.
f(x) Protocol has shipped $rUSD. You can stake it to enjoy LRT yield, $A incentives, up to 4x EtherFi points, and up to 2x EigenLayer Points.
Notional Finance V3 is on mainnet. It enables fixed-rate lending and borrowing, variable-rate lending and borrowing, and leveraged yield strategies
📰 Airdrop Alpha
Ethena is launching its $ENA token on April 2nd. This might be the shortest major airdrop campaign.
InstaDapp Fluid can now be used to get up to 10x exposure to EtherFi and EigenLayer points. It has the cheapest borrowing cost.
Aries Markets introduced its points program. It's a decentralized margin trading protocol on the Move Ecosystem.
📰 Industry News
Algorand claims that devs can now use Python to write dApss on its chain. AlgoKit 2.0 launch enabled this feature.
Munchables, a new NFT game on Blast, was hacked by an insider for ~$63 million. Fortunately, the team recovered all the lost funds.
Polygon zkEVM rollup went down due to issues with its sequencer. It came back online only after around 10 hours.
WorldCoin has open-sourced core components of their Orb. This is a step that will reduce people's skepticism towards the project.
🧠 Twitter Alpha
- A report of current LSTfi meta from Hashkey Capital.
- Coinbase moving onchain?
- Kun on having regrets about selling early.
- What is decentralized? A beginner thread from 6259.
- We spoke about liquidity in the past. Good thread by Macro Alf.
😂 Meme
Until next time,
Edgy
p.s. Signups for my live training, Double Your DeFi, are closing tomorrow. This is going to be the last time we're conducting this training.
So if you're interested in learning how to find your own hidden gems and being more confident in your analysis, then save your spot.
Today's email was written by Edgy, Yayya, and Lorenzo.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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