Update
$PUMP ICO: The Complete Scoop
The most successful crypto consumer app is doing a token sale.
PumpFun is a token launchpad behind the success of the memecoin narrative. It has launched >11.8M memecoins. And it'd made ~$700M in revenue.
Here are the details of the sale:
- They're selling 15% of the token supply to the public.
- They've already sold 18% to institutions in a private sale.
- Fully diluted valuation is $4B, and they're raising $1.32B from the sales.
- You can buy the token from the dedicated PumpFun page or via exchanges like Kraken, Bitget, ByBit, KuCoin, MEXC, and Gate. Be ready by 14:00 UTC tomorrow.
Buyers will have to do KYC. Also, US and UK investors won't be able to participate in the ICO. Below is the distribution of the token:
Many people were expecting an airdrop to users. But they haven't announced any. At least not yet. So initially, there were a ton of criticisms against the project.
- Many found it too greedy & extractive. Pump team had already made $700M from fees. The majority of new tokens are going to insiders.
- Fully Diluted Valuation of $4B was seen as too high for a memecoin launchpad. NFTs were all the rage once. Nobody gives a shit about them anymore. The same will happen to memecoins.
- LetsBONK has already overtaken PumpFun as the leading memecoin launchpad. We covered it in detail in the last newsletter. You can monitor the relevant metrics here.
- Equity <> token misalignment. $PUMP holders are promised a 25% revenue share. But it means 75% of the revenue would go to the team, and they haven't promised any future disclosures. Additionally, $PUMP doesn't have any "real control" (aka governance rights) over the Pump protocols.
Now, the PumpFun perspective does have counters to the above concerns.
It believes memecoins are going to be a permanent sector in crypto. Even on Ethereum DEXes, >20% of the volume since 2020 was memecoins (except for 2022). PumpFun continued to make money in the Q1 downturn of this year.
While LetsBONK has recently overtaken PumpFun in launchpad wars, PumpFun can still take back the throne using mechanisms like fee rebates, token buybacks, or other incentives and promotions.
Competing at the highest level requires centralised teams that can move fast. Keeping the control and revenue from PumpFun is seen as a necessity from the PumpFun perspective.
Even if you agree with the above statements, you could question why they're raising billions and think $PUMP is overvalued at $4B. There are some responses to that as well.
- Application value accrual. Relative to infrastructure like chains, crypto is starting to value applications higher. Both PumpFun & HyperLiquid make around the same level of fees. Compared to the current $40B of HyperLiquid, Pump's FDV is 10x lower.
- Acquisitions & development. PumpFun has already acquired wallet tracker Kolscan, a wallet tracker for top onchain traders. There are rumors of more acquisitions. Partnerships with exchanges to promote token listings would be great as well. Such steps will increase the value of $PUMP.
- Social media vision. They've already started executing on this vision via the livestream feature. PumpFun's plan is to "Kill Facebook, TikTok, and Twitch". This is a gigantic goal that'll take a ton of resources. And if successful, the sky is the limit.
All these theoretical arguments aren't that important. Ultimately, the market will decide the valuation.
Fortunately for us, HyperLiquid has already created a perp market for $PUMP. (They're using a special mechanism to create markets for tokens that haven't launched yet. You can read about it here.)
Right now, the market is valuing $PUMP at >$5.4B. Tomorrow, it'll be sold at $4B. So everyone will be rushing to buy it for (almost) guaranteed profit.
Sponsored by Gearbox
Gearbox: Trusted Credit Layer for DeFi
Credit is necessary for any economy.
It lets builders build faster. Savers earn more. Capital gets reused. And economies grow faster. That's as true in TradFi as it is in DeFi.
Gearbox Protocol is here to be that credit layer for DeFi.
What's Gearbox? To be concrete, here's what Gearbox offers to users
- Earn passively by providing liquidity to Gearbox pools.
- Leverage farm ETH, BTC, & stablecoins. You can go as high as 10x.
- Borrow funds against one or more collateral tokens. Creatively use it within Gearbox integrated protocols to earn more than the borrow rates.
- Leverage long or short without any funding rates. It also enables delta-neutral strategies where you can take an opposite position elsewhere and pocket the difference.
- And more unique strategies like taking advantage when depeg happens by using leverage on the arbitrage strategy. Learn more about it here.
Basically, it opens up a whole universe of onchain actions that wouldn't be possible without a safe, transparent source of credit.
How does it work? Everything starts by enabling curators to create money markets. At its core, those markets connect two groups of people.
- Passive lenders who want yield without much risk. They can just deploy to Gearbox pools to earn yield without lockups or impermanent loss.
- Active borrowers who trade and farm. They use assets from passive lenders to increase their position sizes. Aka, they take leverage.
Hmm... It just looks like an under-collateralised loan. How can Gearbox make sure that borrowers won't run away with the assets?
Because Gearbox is very selective about where the borrowed funds can go.
Borrowers don't get free rein. Funds can only be deployed into protocols that are whitelisted by Gearbox — no shady pools, no meme coin farms on some random chain. If a borrower makes a poor trade, they're liquidated before lenders get hit.
Even if the lender does end up with any loss, Gearbox has an insurance fund to make lenders whole. But you don't have to worry, it hasn't incurred any debt since 2021 while processing over $9.6B in volume. So your money is in good hands.
The image below is good for understanding the relationship between them.
I haven't explained the central box in the above image.
Credit Account is your personal "leveraged DeFi wallet". It'll hold both your initial funds and the capital you've borrowed. All your leveraged operations, whether it's margin trading on Uniswap or leverage farming on Pendle, flow through this single, secure account.
A Credit Account is a smart contract wallet under your control. But you can't ape into the latest memecoin with it.
The funds can only be deployed to protocols already integrated by Gearbox.
So the utility of Gearbox is directly tied to the number of protocols that it can integrate. Gearbox already has 20+ integrations featuring the best of DeFi, including Morpho, Pendle, Curve, Convex, Lido, and more.
The modular architecture of Gearbox is a superpower here. It can keep adding more without needing to overhaul the core protocol.
It also enables risk segmentation, personalised rates, and collateral limits, allowing Gearbox to cater to various user groups and even provide leverage for long-tail assets without increasing risks for passive lenders.
So, from the perspective of other protocols like Uniswap, Gearbox is offering "Leverage as a Service". It allows them to easily integrate and offer leverage to their users without altering their own architecture.
The goal is to integrate most major protocols in an open-source manner.
This will extend the Gearbox leverage across DeFi.
That's a great vision and a great product.
But is the $GEAR token legit? After all, the public thinks crypto is a scam for a reason. It's full of insiders and market makers looking for exit liquidity.
Enter Token Transparency Framework. It's a standardised, open-source disclosure framework to help crypto projects earn trust and signal transparency.
It analyses tokens along four major areas.
- Project & Team
- Token Allocation
- Market Structure
- Financial Disclosures
Gearbox is one of the early projects audited under this framework. And they scored 39.5/40.
That's not just passing. That's a near-perfect score.
I'll summarise the takeaways from the audit below. You can read the full report here.
Project & Team
Gearbox's primary sources of revenue
Now, GEAR does distribute revenue to holders. Instead, the DAO runs an LP buyback program designed to accrue value to all GEAR tokens.
Great. The project has solid revenue sources. But in many crypto projects, the team extracts all the value. Does the value flow to $GEAR?
Yes. Unlike Uniswap, which directs all the value to its Labs team, Gearbox doesn't even have an external company that aims to maximise profit.
Instead, devs are directly paid through the Gearbox DAO treasury. You can monitor all those expenditures on their monthly reports. Additionally, the key members of the development team are public as well.
To be clear, the DAO does have a legal wrapper to handle offchain operations. But it doesn't have any claim on protocol revenues. It only exists to execute DAO's decisions in the real world. They're disclosed in quarterly updates as well.
Token Supply & Allocation
The value of these tokens comes from governance over the protocol and
Many projects have horrible token distribution. Insiders would be given an undisclosed supply during the launch. And they'll dump those on unsuspecting retail.
Gearbox has given full details of how 10B $GEAR had been allocated.
With Gearbox, all the insider allocations (DAO, team, investor, foundation) are transparent. All the tokens are now circulating as well. So you don't have to worry about new unlocks crashing prices. You can see all these details here.
Transactions & Market Structure
Insiders of many crypto projects trade their tokens using insider information. That's illegal in TradFi. Unfortunately, crypto investors don't have the same legal protections.
With $GEAR, you don't have to worry about it. Gearbox has committed to disclosing transactions from any insiders within 30 days. They've even set up a public Dune dashboard for the public to track it in real-time.
Market makers are another danger in crypto. Many of them have explicit agreements with projects to pump tokens for insiders to get exit liquidity.
Gearbox doesn't have any deal with market makers or centralised exchanges. Additionally, since it's governed by a transparent DAO, all such details will be publicly visible.
Financial Disclosure
All crypto projects promise the world. The hard part is actually executing and achieving those KPIs.
With Gearbox, you have many dashboards to track all the relevant metrics, including Financial KPIs.
They also have a blog where they publish major updates and strategic directions of the protocol.
The above chart tracks the Total Value Locked in Gearbox and the Market Cap of Gearbox. As you can see, even though the TVL has gone up quite a bit, the price hasn't caught up yet.
Gearbox is one of the rare protocols to have a solid product and a top-tier token.
🚀 DeFi Catalysts
Phantom, Solana's largest wallet, introduced Phantom Perps on its wallet. HyperLiquid will power it. It's bullish for both HyperLiquid and Phantom.
Backed and Kraken announced that xStocks will expand to BNB Chain. It had launched on Solana last month.
Kinetiq will be launching its Liquid Staking Protocol on HyperLiquid on July 15th. It's a highly anticipated product.
Vertex Protocol team is joining the Ink chain ecosystem. They'll sunset $VRTX and stop supporting other EVMs, including Polygon's Katana.
Truth Social, President Trump's social media platform, might be launching a utility token as part of its new loyalty rewards program.
Liquity has deployed the BOLD reactor vault on Morpho. Users can now borrow against auto-compounding BOLD, ETH, and BTC.
Etherscan has launched HyperEvmScan. It's a block explorer for HyperLiquid's smart contract chain, HyperEVM.
GMX was hacked for $40M. The root cause of the exploit was identified as a re-entrancy attack. Since the hack, they've lost ~$110 in TVL.
Blueprint, an agent development platform, has integrated with Privy to enable agents to manage assets across EVM, Solana, and Sui chains.
📰 Industry News
Strategy, the top BTC treasury strategy company, will sell up to $4.2B of its 10% Series A STRD Stock through an at-the-market program.
Elizabeth Warren, the infamous anti-crypto senator, has released a set of proposed standards to regulate the industry.
Fidelity, one of the biggest asset managers with >$5.8 trillion in assets under management, released a framework to value L1 assets.
🐦⬛ X Hits
- Electric Capital's $ETH thesis.
- Is crypto worth the effort for you?
- A list of positive catalysts for $ETH.
- Onchain trading cards: next RWA category?
😂 Meme
Until next time,
Edgy
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.
Whenever you're ready, here's how we can help you:
- ⚙️ The DeFi Edge PRO - Designed for busy people who want to stay ahead of the curve. Leverage our research to save you hours each week, and to see what we're personally investing in. Join today.
- 🚀 The DeFi Edge Ventures - We identify, invest, and help amplify DeFi Protocols that positively impact the Crypto space.
You're receiving this email because you signed up for my newsletter. You can update your Preferences or Unsubscribe here.
113 Cherry St #92768, Seattle, WA 98104-2205
No comments:
Post a Comment