Update
Stablecoin L1s: Bubble or Legit?
Big boys dropped some big bombs this week.
- Stripe is building an Alt-L1 called Tempo.
- Circle also announced its L1 chain called Arc.
- Previously, Tether has invested in two L1s: Plasma & Stable.
These aren't just any random projects. We're talking about heavyweight teams here.
Tether is behind the largest stablecoin, USDT ($165B). Circle is behind USDC ($65B). And Stripe is the TradFi giant that dominates online commerce.
We all knew TradFi would wade into crypto eventually. But many people didn't expect them to build their own L1 blockchains.
Manlets expected them to build apps on Solana. Ethereum maxis figured an L2 would be their obvious choice. So… why go through the trouble of building brand-new L1s?
- Gas fee can be paid in stablecoins
- L1 tokens are usually valued higher
- Control over infrastructure to enable millisecond latency & throughput
- L1s can extract maximum value. They won't like leaking value elsewhere.
- Customizability to ensure compliance, enable private transactions, and so on.
Of course, not all the new L1s will check all these boxes. It's just a list of plausible reasons.
Most of crypto Twitter thinks launching new stablecoin L1s is wrong, at least in the long-term endgame state.
Solana is betting on a "monolithic" future: the majority of crypto activity will happen on a single L1 chain. Manlets (CT word for Solana maxis) think Stripe should've built on Solana because,
- Composability with existing liquidity and applications on Solana.
- Building chains is hard. Companies shouldn't be wasting resources to attract users and infra partners to a new network. Manlets think Solana deployment will be more profitable.
On the other hand, ETH Maxis thinks Stripe should build an L2. Just like Base and Robinhood. Why?
- Ethereum is the most secure chain. Stage 2 L2s can inherit that security.
- Base has already proved the profitability of the L2 model with a 94% profit margin.
- It provides almost all of the benefits of being L1, like customizability. Upcoming Codex L2 is an example.
- Ethereum also promises seamless interoperability b/w all L2s in the future. (The tech isn't live yet.)
While most people consider an Alt-L1 from Circle to be bearish ETH, some maxis don't think so. These new L1s are using the Ethereum VM. So, these chains will
- Increase the developer network effects of the Ethereum ecosystem.
- These companies will learn that L1 is the wrong approach and transition into L2s in the future.
These new chains are similar to corporate chains from 2017. Circle's chain will only start with permissioned validators. Previous corporate chains failed. Whether this new generation fares better… time will tell.
Despite all the criticisms, these new chains are bullish for crypto as a whole.
Stripe has massive distribution among normies. Its chain will bring them onchain.
It'll be a while before these networks go live. Let's go back to our public chains until then.
Sponsored by Mantle
Mantle: Big Partnerships and Bold Moves
Crypto is changing fast.
Regulators are pro-crypto. TradFi is aping our tokens. The moment to act is now.
Mantle 2.0 is positioning Mantle as the institutional-grade infrastructure for next wave of mass adoption.
They're deepening their partnership with ByBit. Leaders of ByBit have joined Mantle as advisors. Recently, they had launched 4 use cases for $MNT to boost it's utility.
- MNT is now available on Bybit OTC
- Token rewards for MNT holders using Launchpools
- Smart Leverage on $MNT allows users to amplify their earning potential
- Double Win, an advanced short-term structured product on ByBit, also supports $MNT.
These are just some live examples. More is brewing in the pipeline.
- MNT loan/margin incentive
- More MNT-quote coin pairs, like BTC/MNT and ETH/MNT.
- Increase incentives for holders. Give privileges like access to real-world events to holders.
The bigger picture? Access to deep liquidity and institutional counterparties on ByBit unlocks a serious growth engine. Even apps on Mantle Network will be able to leverage this partnership.
Markets
What's Driving Markets? DATs.
$ETH surprised many investors in the last few months.
It's outperforming BTC. Beating SOL. And leaving most altcoins in the dust.
The reason? Look at the chart above. It tracks ETH holdings by ETFs and Digital Asset Treasury (DAT) companies since February 2025.
The chart tracks the ETH held by ETFs & Digital Asset Treasury (DAT) Companies from February 2025. The % held by them has increased from 3% in April lows to 8%. In other words, TradFi has been massively bidding $ETH.
We can see how it affected $ETH in its price chart for the same period.
When you compare both charts, you can clearly see the impact. $ETH bottom was in early April. Treasury companies for ETH entered the picture at the same time, and ETH started posting its insane green candles.
We can see massive growth in ETH ETFs as well. It's due to these DAT companies as well.
Tom Lee is a financial analyst well respected in TradFi. He's the biggest ETH DAT, BitMine Immersion Technologies.
When he started the company, he heavily promoted ETH in the TradFi media channels like CNBC. TradFi associated $ETH with "stablecoin chain" and "base layer for finance".
Many could also be front-running billions that Tom Lee had promised to invest in ETH. So, DAT is also indirectly responsible for ETF inflows as well.
I've already explained the DATs last month. TLDR: They're companies that hold digital assets like BTC & Crypto. Since their goal is to increase ETH/share, they usually trade at a premium to their Net Asset Value.
You can read a more detailed explanation of DATs here.
If you've been around crypto for a while, you know where this can lead.
In past cycles, these same leverage-driven plays set the stage for brutal bear markets.
This could be the fuse for the next one.
Here's how to watch for trouble:
- Monitor debt levels. DAT can take debt to buy crypto. If major DATs are forced to sell crypto to repay these debts, it can cause a downward spiral.
Unfortunately, there isn't a simple dashboard to monitor this yet. You'll have to manually dig into each company. Fortunately, none of the major DATs has this risk right now.
- mNAV of major DAT. mNAV calculates the premium of DATs. This premium is crucial to accumulate more ETH/share by selling stock.
You can track the data here. If the mNAV of major DATs falls below 1, it's a danger zone.
- Trading volume of treasury stocks. Selling stocks requires liquidity. A good metric to measure liquidity is the trading volume. Sustained low volume means the trend is dying.
You can see even more data points here.
This is the biggest trend in the current market. And it isn't slowing down. They're planning to deploy billions more into crypto.
🚀 DeFi Catalysts
Cap, a unique stablecoin protocol, will go live on Ethereum on August 18th. It was incubated via MegaETH's accelerator program.
Monero is the leading privacy-focused L1 chain. 51% of its mining hash rate is controlled by Quibit, which gives them full control over it's blocks.
Pump.fun has taken back the lead in memecoin launchpad wars. 80% of memecoins are deployed on PumpFun.
LayerZero is proposing to buy out Stargate. All circulating STG will be swapped for ZRO at a ratio of 1 STG: 0.08634 ZRO.
Ethereal, a spot & perp exchange powered by USDe, has begun preparations for the Ethereal mainnet. Season one epoch began yesterday.
Unichain has shipped 200 milliseconds sub-blocks. Users will get guaranteed execution of their transaction in 200ms.
Asymmetry Finance has launched USDaf. It enables users to borrow with BTC or Yield-Bearing Stablecoins at user-set fixed interest rates.
Ronin Network is an L1 associated with Axie Infinity that's focused on GameFi. It's transitioning into an ETH L2.
Trust Wallet has chosen Morpho as the default earn engine in the Earn hub. Yield will be automatically distributed to user wallets.
📰 Industry News
Coinbase rolled out DEX trading for US users. This unlocks massive distribution for assets on Base.
Do Kwon, the founder of the Terra Luna chain, pleaded guilty on Tuesday to one count each of conspiracy to defraud and wire fraud.
Uniswap Foundation proposed that UNI DAO adopt "DUNA" as the legal structure for the Uniswap Governance Protocol.
🐦⬛ X Hits
- The art of reply guying.
- How to use Perplexity for crypto research?
- The prediction market war: Polymarket vs Kalshi
- Questions for the new treasury companies for altcoins.
- Strategies to go from 3 figures to 7 figures.
😂 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.
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