News
What does the US-Iran War Mean for Markets?
Last week, the world may have crossed a critical threshold.
What happened? On February 28, the US & Israel attacked Iran, killing Supreme Leader Khamenei and officials.
The reasons? Take your pick: Israel's influence, "liberating" Iranians, strategic positioning. I won't speculate on motives here.
Many hoped this would be a short war, sorta like the last 12-day war. But they were wrong.
Instead of recapping the entire geopolitical situation, I'll use Polymarket on the US-Iran ceasefire by April 30. We can see the probability of it declining rapidly.
Right now, Polymarket thinks the war will continue for more than two more months.
You can monitor the market here. There's also a market for Regime Change in Iran. There are also many vibecoded dashboards to track the conflict in much more detail. Worldmoniter.app is pretty good.
Now, I'm not that guy who'll claim expertise on the current hot topic. So, I won't analyze the geopolitics or strategic situations. You'll find plenty of it online.
I'll limit myself to its impact on the market. (You do need a geo-political model of the conflict to trade in the market, but you'll find good resources elsewhere.)
What about equities?
- Before the war, the Dow Jones Industrial Average was $49k. It's down 2% to $48k. That's noticeable, but still not the worst-case scenario.
- The S&P closed Feb 27th at $6.85k. Now, it's at $6.83k. It's a very tiny move. But the volatility on it has been much higher.
- The investor positioning in the options market is extremely bearish. You can read the details here.
- Other economies are also extremely volatile. South Korea had a historic crash (12% on March 3rd), which was followed by 10% gain on March 5-6.
Here's the scary part: GCC countries are reportedly pulling over $2 trillion from US investment commitments. That's... a lot of money rushing for the door.
The real metric to watch: Oil prices.
Iran closed the Strait of Hormuz. 20% of the global oil supply flows through there. Prices are now up +45% from December 2025 lows. JP Morgan estimates prolonged closure could push oil to $120-$130/barrel.
High oil = high inflation = falling equities = pain for everyone.
Trump promised low inflation with midterms 8 months out. Oil is the key indicator. Polymarket has June crude at ~$84—bad, but Trump's red line is probably $90-$100.
How did crypto prices react?
There was immediate panic, but it was contained very quickly. And now, crypto is actually doing fine.
- Before the war, $BTC was around $65k. When the news got out, it went down to $63k. But since then, it has been going up. Right now, $BTC is at ~$71k.
- Other coins like $ETH & $SOL also followed the same pattern. The Total crypto market was the same story as well.
Why? War means money printing. Money printing means dollar debasement. Dollar debasement means... you know where this is going.
Still bearish territory overall. But crypto as a dollar hedge is doing exactly what it's supposed to do.
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Katana: The Chain Designed for DeFi
What's the massive spike in the above chart?
It shows the rapid growth of Katana's DeFi TVL. Within 5 days, it grew >243% to from $208M to $715M!
How did that happen? Integrations with OKX & Binance Wallet. Users of the platforms can now deposit USDC/USDT on Morpho vaults on Katana and immediately earn yield. It's very attractive cuz in addition to native lending yields, they'll get Morpho and KAT incentives.
Why does this matter? I've already talked about Katana being the best chain designed for DeFi. Now, big companies like Binance and OKX are trusting Katana to earn yield for their users.
This should accelerate the Katana flywheel. More activity > more chain revenue > more DeFi opportunities > more activities > repeat.
The easiest way to get started on Katana is with its Katana App.
It's designed as the DeFi command center for the chain.
You'll be able to do everything from swapping to portfolio management there.
Updates
Is Everyone Leaving AAVE DAO?
The governance drama at DeFi's top dApp is continuing.
Everything revolves around the "Aave Will Win" (AWW) proposal. It was introduced by Aave Labs, the OG team. Aave Chain Initiative (ACI) had many feedback on the proposal. ACI is one of the service providers of the Aave DAO.
We covered everything about the proposal and the events leading up to it in a previous newsletter. Click here to read it.
A lot has happened since then. Let's catch up.
Firstly, ACI released a damning audit of Aave Labs' performance.
They had taken a lot of money. $86M in cash from ICO, VC rounds, DAO payments, and unapproved swap fees. Plus, 23% of the original token supply.
In return, their performance was very poor.
This claim was backed by data. Losing major BD deals. Last place in governance & onchain participation.
The audit is available here. Aave released its list of contributions as well. But it was much less convincing than the ACI audit.
Secondly, BGD Labs left Aave DAO. This is another major service provider of Aave DAO.
Why are they leaving? Because they felt Aave DAO had been taken over by the Aave Labs team. And the team was consistently promoting Aave v4 at the cost of Aave V3. The politics is this: v3, the real revenue generator, was built by BGDLabs. Aave Labs is building the v4, and only they'll get the DAO money for shipping it.
This was a major loss for the project.
Thirdly, Aave Labs pushed the AWW proposal without changes.
The four conditions that ACI had requested on the proposal were very reasonable. Like dividing the proposal into different parts. But the Aave Labs team ignored the feedback and went ahead with the vote.
This was a contested vote. It was barely passed with ~53% people in support of it. According to some analysis, it'd have failed without wallets linked to the Aave Labs team heavily pushing for it.
TLDR; Team is voting for themselves (with somewhat undisclosed wallets) to take a big chunk out of the DAO treasury.
Finally, ACI announced they're leaving too.
These were the guys who pretty much ran the ship in the last three years.
- Deployed >$100M in incentives
- Handled 61% of all governance actions
- Drove strategies behind 48% of protocol revenue
- Grew $GHO stablecoin supply from $35M to $527M
- Helped push Aave's market share above 65%
This is very bearish for $AAVE. Major talent is leaving the ship. Service providers have lost confidence in the DAO process.
MakerDAO & $DAI had a similar experience when its founder took over the DAO and forced the transition to Sky & USDS. It led to many people leaving MakerDAO.
If the story repeats, that's a tragedy for $AAVE.
It'll be even worse if the people who left join Morpho, Aave's main competitor. If they create a new fork by themselves, it'll be a lesser threat.
But if we look hard enough, we'll be able to see beyond the gloom and doom. So here are some bullish arguments.
Firstly, this can be seen as Stani going founder mode to execute faster. This would require him to have company-like control over the DAO.
I'm not convinced by that argument because MakerDAO did something similar, and the results weren't good.
Secondly, the Aave roadmap is still solid. There is a lot of exciting stuff coming up. Aave v4 launch, the Aave app, Horizon & RWA, and more.
Most importantly, none of this has affected the product metrics.
Btw, the $AAVE token price was affected. But metrics like TVL dominance and Lending market share haven't dropped much. Aave is still the king of DeFi.
At the end of the day, this is a phase shift. Aave is becoming more centralized under the Aave team. We'll know if it was the right decision or not over the coming months.
🚀 DeFi Catalysts
M0, PayPal, and MoonPay introduced PYUSDx. It is designed to help builders launch and scale application-specific stablecoins
Drift Protocol introduced Drift Guild. It's a permissionless program for Drift supporters to contribute and earn DRIFT rewards.
Meteora introduced Dynamic Terminal. It is a redesigned interface for liquidity providers to earn more yield.
Pump.fun has announced that it'll support trading of more than Pump fun coins. This is good for the app to expand beyond "just memecoins".
Backpack has announced a new partnership with Superstate to offer onchain IPOs directly within the application.
Jupiter Exchange introduced the Jupiter Card. It's a fully integrated onchain card inside Jupiter Mobile.
Paradex, a zero-fee perp trading platform, has launched $DIME, its native token. It has significantly underperformed relative to expectations.
Reflect Money introduced Reflect Whitelabel. Projects can use it to create a custom stablecoin, powered by Reflect's infrastructure.
Opinion.fun, the prediction markets platform on BNB Chain, will list its token $OPN on the Binance Launchpool. Users can now farm it.
📰 Industry News
Coinbase has launched stock trading on its platform. It is now expanding beyond just a crypto company.
Dune has released its MCP server that can connect to your AI coding clients. Now users can query onchain data without learning coding.
Liquifi is rebranding as Coinbase Token Manager. It'll help teams manage token cap tables, automate vesting and distribution, and streamline compliance.
Binance launched its first batch of 7 AI Agent Skills. Agents can now access structured data and trading infrastructure across Binance Wallet and Spot.
SoFi is the first national chartered bank where individuals can buy, sell, and hold crypto. It now allows Solana network deposits from its banking app.
🐦⬛ X Hits
- What are allocation vaults?
- The investable tokens in crypto.
- HIP-6 Proposal: Token launch auctions.
- Hot take: Agentic commerce won't kill the cards.
- The multiverse markets: the next big innovation in prediction markets.
😂 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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