So, there's this myth that Bitcoin is the perfect tool for criminals. Shadowy money for shadowy people. But is it REALLY?
Kai West was a serial corporate hacker who sold stolen data. Authorities were able to track him down by sending him $250 in BTC for the data.
Using Bitcoin for crime is like robbing a bank while wearing a GPS ankle monitor.
Here's what we got today:
Robinhood Announcements. Stock tokens, a new L2, and more.
Gearbox Deep Dive. Introduction to the leverage layer of DeFi.
Around the web. xStocks went live on Solana, Pump.fun launched a mobile phone, Steakhouse has launched a Sky star/subDAO, and more.
Today's email is brought to you by Gearbox — the leverage layer of DeFi.
Here's your Edge 🗡️!
Update
Robinhood Is Bringing Stocks Onchain
Source: RobinhoodApp
The biggest RWA tokenization initiative is here.
Robinhood announced it in a private ceremony during the Cannes EthCC. Yup, the fintech giant with >25.2M funded accounts, aka users, is officially in deep.
Let's break down the crypto-related announcements.
Stock Tokens
DeFi has always claimed it would become the backend for all of finance, including TradFi. Well, that vision just took a big leap forward.
Robinhood tokenised US stocks on Arbitrum for European users.
Zero commission trading.
Exposure to US tokens and ETFs.
Dividend payments will be given to users.
It'll have a phased rollout. So, all the goodies aren't available right now.
In Phase one, you can trade stocks only 24/5. It's due to the limitations of the initial tokenization process, which depends on traditional brokers. In phase 2, there'll be 24/7 trading. The full benefits of DeFi, from self-custody to collateral utility, will only come in phase 3.
You can watch the details of the tokenisation process and different phases in the Keynote here.
Private Company Stock is a surprise feature for users.
Many of the most profitable companies in the world are private companies: from OpenAI to SpaceX. Traditionally, these were only accessible to very few elite groups. Robinhood will enable you to buy private company stocks of selected companies like OpenAI & SpaceX as well.
If you're a Robinhood EU customer and you qualify, you are now able to claim your tokens in-app until July 7th.
TLDR: Robinhood Europe investors can buy American capital markets through tokenized US ETFs, stocks, and pre-IPO opportunities.
The Robinhood Chain
Source: @RobinhoodApp
While Stock Tokens will be issued on Arbitrum initially, it'll migrate to Robinhood Chain once it's live.
They'll still be using the Arbitrum tech stack. We don't know the full details of the deal between Arbitrum & Robinhood. Word is that Arbitrum did some heavy BD to poach Robinhood away from Solana. So props to the Arbitrum team.
It'll be chain optimised for real-world assets: arts, stocks, real estate, and more. Robinhood had described their tokenisation system in their presentation, which you can watch here.
Market Reactions
$HOOD pumped >12% on the announcement. The reason is obvious: the Robinhood Chain.
Coinbase has already proven the insane profitability of building L2 Chains for companies with distribution. In the last year alone, Base chain has made ~$75M in profits (excluding offchain costs). That's insane.
Base profitability chart from Growthepie.xyz
So, this is a great move by Robinhood.
But surprisingly, the $ARB token is down 11% in the last 24 hours. This could be due to two reasons.
How these announcements will add value to the $ARB token isn't clear. The full details of the deal aren't out yet. If there's some form of value accrual to $ARB, it'll be bullish.
Degens were already speculating about the Arbitrum partnership, and the price had already pumped. So the announcement had turned into a sell-the-new event. $ARB being up 5.2% on the weekly chart points to it.
$ETH stayed at $2.5k.
The market saw the announcement as irrelevant for $ETH. Why?
Let's go back to the earlier Base example. While the Base revenue was ~$80M in the last year, it only paid ~$5M to Ethereum. So $ETH is getting little value by outsourcing execution to L2s.
The market might also be somewhat desensitised to new L2s, even if they're from big companies. Let's look at some big names that are already building ETH L2s.
Ink chain from Kraken
Soneium L2 from Sony
Sam Altman (OpenAI)'s World Chain
Deutsche Bank has announced a chain as well.
Global auditing giant Ernst & Young has a zk-rollup as well.
Alibaba (Ant Digital), China's big tech company, is building an L2.
So right now, the market doesn't care if another big company announced an ETH L2.
But that doesn't mean these aren't bullish for ETH. But imo, there are a couple of things the market needs to see before it can pump ETH.
Remove user fragmentation via tech like intents. The tech is already there; it's just a matter of adoption.
Enable synchronous composability across all chains in Ethereum through based sequencing. This will remove fragmentation for developers.
Some of those above L2s from big companies achieving huge success, like Base. It'll cement Ethereum as the settlement layer.
Scale ETH L1 to cement it as the hub of the Ethereum ecosystem. Right now, Base looks like the Hub. Fortunately, Justin Drake, a top EF researcher, announced a credible path to reach 10k TPS & GigaGas blocks on Ethereum L1.
TLDR: ETH's tech and fundamentals are good. But the market hasn't priced it in since there are a couple more steps before the improvements are visible to the end user.
TradFi is finally beginning to ride on DeFi rails. But there's still a way to go.
The real endgame? Companies natively issuing stocks onchain, not just tokenising them after the fact. Robinhood just got us a lot closer.
Do you usually find high-yield farms and fail to take full advantage?
If you only deploy your 10k allocation to the farm, you are leaving a lot of juicy yield on the table. You need a lot more capital to maximise your yield.
But if you want to borrow in DeFi, you'll have to deposit even more money in collateral. So it doesn't make much sense. What to do?
Enter Gearbox Protocol, the leverage/credit layer of DeFi. It can 10x your exposure by enabling you to deposit 100k in the farm using your original 10k. It'll help you leverage farm and margin trade.
How does it work? At its core, it connects 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?
Gearbox only allows borrowers to deploy assets to protocols integrated by Gearbox and added to the protocol's "AllowedList". So, the borrowers cannot LP into a random memecoin pool on the 100th L2.
If the trader borrows funds and the trade goes against him, he'll be liquidated before the lender's funds are affected. If they do end up with any loss, Gearbox has insurance funds to make lenders whole. But you don't have to worry, it hasn't incurred any debt since 2021 while processing over $9.3B in volume. So your money is in good hands.
The image below is good for understanding the relationship between them.
Most of the above image should be recognisable to you. The lenders are providing funds to a pool to earn yield. Protocol Treasury is providing insurance to the lenders. Many protocols are integrated into the protocol. There are traders, aka borrowers, on the other end.
But the concept at the centre of the above image? I haven't explained it.
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 allows for the seamless connection of customised pools with Credit Account managers without needing to change the internal codebase, significantly simplifying integrations.
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.
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.
Gearbox truly places you in charge. They aren't forcing you into any specific pre-made strategy. You decide how to apply leverage, where to apply it, how to trade assets, and when. The only restrictions are to prevent degens from siphoning money into some unaudited contract that'll be hacked by North Korea.
Lido's Institutional Restaking Instance
A prime example of Gearbox Protocol's power in action is the recently launched P2P powered wstETH market. At $130M, it's the largest curated market for ETH assets in DeFi.
The dedicated instance provides users the opportunity to borrow wstETH to maximise their Mellow LRT rewards. With the instance, Lido is no more just a part of Gearbox's offerings but is supporting its own credit market using Gearbox's infrastructure.
So it is one of the most trust-minimised and censorship-resistant BTC derivatives available on Ethereum.
These markets were set up using the modular and permissionless codebase of Gearbox.
Get up to 20x leverage on rstETH by Re7 on Mellow Protocol. Incentivisied by P2P, the market has been yielding >13% APY for over 3 months
You can lend wstETH by Lido to earn passive yields, enhanced with additional GEAR incentives. Right now, that amounts to 3.64% in APY.
Gearbox enables any protocol, institution or curator to set up their preferred lending markets permissionlessly. So we can expect them to become the de facto leverage layer of DeFi.
Earn your ETH yields passively or multiply them with Mellow LRTs, the choice is yours.
xStocks has gone live on Solana. It's available on Kraken and Bybit. These tokens will be available 24/7 through Solana DeFi.
Steakhouse Financial introduced Grove. It's a new star/subDAO in the Sky Ecosystem, like SparkFi. It aims to bridge DeFi & TradFi.
YieldNest has introduced $ynUSDx. It's designed to deliver optimized, risk-adjusted yield up to 15% from stablecoins.
Pump.fun launched its official mobile application. It's available on both iOS and Android devices.
Gauntlet introduced gtUSDa, Gauntlet USD Alpha. It's a vault providing institutional-grade, risk-adjusted, real yield on stablecoins.
Lido approved the dual governance proposal. It's a dynamic timelock system giving stETH holders a say in the governance of Lido DAO.
Renzo Protocol introduced Flow Vaults. It allows institutions to launch a fully custom liquid restaking token.
Euler Labs has launched its Super Lending App on Arbitrum. They've also included an incentive program worth $100,000 in rewards.
Terminal Finance has announced the marketplace for institutional asset trading, powered by reward-bearing dollars, including Ethena's sUSDe.
Renzo introduced Restaking Bonds. It uses Flow Vaults to let AVSs lock security for a fixed term at a fixed APY, giving networks and depositors bond-like predictability.
Nexus has released its testnet in high-participation regions including the U.S., Vietnam, Nigeria, India, Indonesia, and more.
🚀 New Launches
Katana went live. It's a DeFi-focused chain with mechanisms to create deep liquidity and has already attracted ~$250M in TVL.
T1 Protocol has released the testnet of Proof of Read that can prove transactions between Base & Arbitrum in real-time.
Alkimiya launched the stablecoin metrics market. Its vision is to build markets for fundamental metrics like blockspace demand, onchain revenue, and more.
Asgard Finance has launched its public beta. It allows users to scan and invest in the best risk‑adjusted yields across Solana DeFi.
Term Labs went live on Base. It enables predictable borrowing and lending at fixed rates in the Base ecosystem.
Lootbase is a mobile application that lets users use HyperLiquid on mobile phones. It has gone live on the App Store and Google Play.
📰 Industry News
US has effectively legalised tokenised stocks. Dinari has secured the license. Coinbase and Kraken are also pursuing such approval.
Tom Lee, a Wall Street strategist, is converting BitMine, a BTC mining company, into an ETH treasury strategy company.
Enso launched Cross-chain DeFi Deposits. It's the first embeddable shortcut that lets any DeFi protocol accept deposits from any chain.
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:
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