Guide
Barbell Strategy: How to Play Narratives?
Narratives in crypto change fast.
If it was memecoins last year, it'll be AI Agents this year. If it's Internet Capital Markets today, it'll be cashflow tokens tomorrow. And so on.
It can be difficult to create different strategies for each narrative. How do we play the new narrative?
Enter barbell strategy. It's an investing approach from Nassim Nicholas Taleb, an expert on risk management. Here are the rules for applying this strategy to crypto narratives:
- Keep a significant percentage (80-90%) of your allocation in safe assets of the narrative. They'll be safe investments that protect your capital. But your upside will be limited.
- On the other hand, you'll allocate to very high-risk assets as well. This will be a small part (10-20%) of your allocation, but if successful, huge upsides from these will make a difference to your portfolio.
The key to this strategy is avoiding any medium-risk, moderate-reward tokens of the narrative. Here are the reasons to avoid these middle-ground assets:
- It only gives an illusion of safety.
- It doesn't benefit from extreme upside or avoid extreme downside.
- It's vulnerable to black swan events (rare, unpredictable, high-impact events).
This strategy is especially suited for markets with high volatility and many black swan events. And crypto markets fits the bill perfectly. In crypto, the safe-looking medium risk assets aren't safe at all. Just focus on the extremes.
Now, let me illustrate this approach with some examples.
#1. Internet Capital Markets
Believe.app popularized this narrative. So it's token, LAUNCHCOIN, is the market leader of this narrative. Majority of your narrative allocation should go to it.
For the higher risk play, you can choose among the many tokens launched on the platform, like $FITCOIN & $DUPE.
#2. Artificial Intelligence
Bittensor ($TAO) has been the market leader for Artificial Intelligence narrative forever. There are many options for a high-risk play. Obvious ones are Bittensor subnets like SN64 Chutes and SN33 ReadyAI.
#3. AI Agents
Virtuals Protocol is the alpha play for this narrative. If you want easy exposure to AI Agents, the majority should be in $VIRTUAL. For the high-risk option, you can choose specific agents like $ARBUS.
#4. DeFi
Compared to the above narratives, DeFi is a big sector. So for the alpha play, you have a lot of options. Aave for lending, Pendle, etc.
With DeFi, you'll also find a lot high high-potential projects with relatively higher market caps than other narratives. Examples include Fluid for dex & lending, FRAX for stablecoins, and so on.
#5. RWA
Ondo Finance is recognized as the market leader for Real World Assets.
Most of the beta plays in the RWA sector can also be in other categories. Maple Finance is a protocol that lends to real-world institutions, Frax Finance generates yield from US T-bills, and so on. They are good beta plays for the RWA narrative.
Alright so let's see a practical example
1. Majorcoin Exposure like 30% BTC, 20% solana
2. Pick two narratives. Let's say A.I. Agent and DeFi.
• Virtuals 15% (Safe) + 5% (high risk a.i. agent play)
• Pendle 15% (DeFi) + 5% (high risk defi play)
3. Stablecoins (10%)
Boom!
Sponsored Deep Dive
Mantle: The Ecosystem for Your Financial Life
Most crypto projects are only targeting crypto-natives.
This limits their potential. If you're only talking to insiders, you'll never reach mass adoption.
Mantle gets this. They're not just building for the crypto crowd. They're creating a massive, interconnected ecosystem that serves both crypto natives and regular folks. Yes, even the institutions are included.
And recently? Mantle dropped some bombshell updates that show they're playing a whole different game. Let's break them down.
#1. Mantle Banking
The DeFi dream is to be the global financial layer, the foundation on which everything from your daily coffee to your retirement funds runs.
But here's the thing: that's not happening yet. Not even close.
Most people don't use DeFi. Many haven't even heard of it. And even seasoned crypto investors often treat DeFi as the "wild west" corner of their portfolio—risky, complex, and not exactly the place to receive your paycheck. DeFi and people's financial lives are in completely different categories.
Like it or not, people need TradFi for their daily lives. In that case, how can we integrate DeFi into daily financial life?
Enter Mantle Banking. It integrates TradFi and DeFi into a single seamless experience.
Mantle Bank will be a crypto neobank that helps users spend, save, and invest across both fiat and crypto finances in one account.
- You can spend your fiat and stablecoins anywhere through virtual cards.
- Seamless shift between crypto and fiat within your Mantle Account. It'll support many fiat currencies: USD, RMB, HKD, and more.
- Grow your account through crypto-native stable farms, investment products like MI4, and other RWA opportunities.
- Receive collateralized credit from select asset deposits. And more.
It'll have the seamless experience of Web2 applications with the benefits of DeFi. You'll be integrated into TradFi systems as well. For example, you'll be able to receive your fiat salary into your Mantle Account.
Everything will be powered by Mantle Network on the backend.
TradFi is like an old player at the end of his career. Slow transactions, settlement time of multiple days, geographic restrictions, high fees, and more.
DeFi will replace TradFi eventually. And Mantle is leading the charge by providing a comprehensive financial solution for people.
#2. Mantle Index Four (MI4)
It's a new tokenized fund from the Mantle team.
It'll provide exposure to blue chip assets like BTC, ETH, SOL, and USD stablecoins. The assets will additionally earn yield as well. They've added native yield-bearing strategies like Mantle's mETH (an ETH liquid staking token), Bybit's bbSOL, and Ethena's USDe.
Mantle Treasury will deploy up to $400 million as the anchor investment into MI4.
The target market includes both institutional investors and crypto-natives.
- They're leveraging institutional-grade infrastructure, including Fireblocks and multi-signature controls.
- It'll deliver sophisticated portfolio construction methodology within a regulated framework for compliant, seamless onboarding and investor protections.
A traditional fund structure with proper administration, reporting, and compliance has many regulatory requirements. MI4 is a great option for them to access crypto beta and optimized yield through staking strategies.
Securitize is the leading real-world asset tokenization platform. Mantle has partnered with Securitize to tokenize the Fund interest on Mantle Network. This allows investors to use the tokenized fund onchain when utilities emerge in DeFi.
This is just one of the many areas where Mantle is innovating.
#3. mETH Protocol
mETH Protocol is a protocol that was spun out of Mantle. It provide liquid staking service through $mETH and liquid restaking via $cmETH.
With the Pectra upgrade, people are getting excited about ETH again. For your $ETH exposure, you should consider holding $cmETH.
- You earn native ETH staking rewards.
- You get restaking exposure across multiple protocols.
- You unlock "powder rewards" (Mantle's native incentives) across supported chains.
And you can earn even more yield on top of the above:
It's like a yield buffet.
mETH protocol is already well positioned.
- It's included in the Mantle Index Fund. A significant % of the fund inflow will go to mETH.
- cmETH Fixed Yield Vault hit 100% vault capacity in just its second month (30K cmETH ~$700M)
- cmETH held on Bybit Earn grew from 3,579.6 to 12,446 between Jan. 27 and Apr. 24 — an increase of 8,866.4
- Despite launching only in late October 2024, it has already become the 4th largest ETH restaking token by TVL.
Here's the thing: Mantle isn't building just one killer product. They're building an entire ecosystem. Every piece, from Mantle Network to Mantle Banking, works together. The synergies are real.
Most projects are still focused on a single lane: a wallet, a token, a restaking protocol. Not Mantle. They're designing an interconnected system that works for everyone, from the hardcore DeFi user to your cousin who still uses cash for everything.
🚀 DeFi Catalysts
Polygon introduced VaultBridge, a potential revenue stream for chains on AggLayer. It uses Morpho to earn yield on bridged assets.
Anza, the research division of Solana, introduced a new consensus mechanism for Solana. It promises to reduce time to finality to 150ms.
Virtuals Protocol is making changes to its Diamond Hand Bonus program. Passively holding agents in your wallet won't earn it anymore.
Aevo has decided to restart monthly onchain buyback of the $AEVO token. It'll be done using the surplus revenue of the protocol.
Dinero, a project that started on Ethereum, announced the launch of pxSOL on testnet. It's their liquid staking token for Solana.
Aave Labs has proposed a Uniswap v4 Position Manager to the Uniswap DAO to enable $GHO borrowing against v4 LP positions.
StarkNet has reached the stage 1 level of security within the L2beat framework. This is necessary for the safety of user funds.
Sky Ecosystem (previously MakerDAO) has completed making $SKY the only governance token of the ecosystem.
Infinex launched their Yaprun campaign with Kaito. It'll distribute $6M in rewards across four seasons.
Arbus staking is now live on Virtuals. Stakers can earn Virgen Points and get positioned for upcoming Arbus ecosystem benefits.
🚀 New Launches
Liquity relaunched its v2 on the Ethereum mainnet yesterday. It has many friendly forks that'll allocate a % of their token towards Liquity pool rewards.
Oro has launched its private beta. It brings gold onchain to make it programmable, composable, and yield-bearing.
Yield has launched Yield Optimizer on Base. It promises to provide automated risk-adjusted yield for its users. It'll handle everything on the backend.
HyperTracker is live. It allows you to see every wallet and open perp positions on HyperLiquid.
AIxVC has partnered with Virtuals Protocol. They have launched Axelrod, it is an autonomous hedge fund agent.
📰 Industry News
GENIUS Act passed the Senate vote. It'll bring regulatory clarity to the stablecoin sector.
VanEck launched its first tokenized fund, $VBILL. It's issued via Securitize on Ethereum, Solana, BNB Chain, & Avalanche.
🐦⬛ X Hits
- Tools for the trenches.
- HyperEVM airdrop opportunities.
- How to play the Genesis Launches?
- Realized Extractable Value (REV) 101.
- Everything you need to know about native rollups.
😂 Meme
Until next time,
Edgy "is about to rebrand his cartoon profile pic to add glasses, look Asian, and have a green background"
Today's email was written by Edgy and Yayya.
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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