The Weekly Roundup: Crypto Sector "Re-Stabilizes", Reptilian Renegade Rug Pull, Robinhood to Develop Crypto Wallet
Market Movers
Though in the red, the largest coins by market cap did not fall as drastically as last week, highlighted by Bitcoin dropping a little south of three percent by Sunday night in comparison to ten percent the previous week
KuCoin (KCS) was our biggest mover of the week, rising a little over eighteen percent
KuCoin is a token issued by the KuCoin cryptocurrency exchange, the fifth largest exchange in the world. Holders of KuCoin who keep their tokens on the exchange receive a small percentage of the revenue generated by the exchange (via Coinbase)
The average return in KuCoin for holders of the token was 30% in 2021 (via KuCoin). The more KuCoin you hold, the more KuCoin you will receive as passive income
First Sip
If you’re already a crypto native, feel free to skip to “Table Talk.”
YIELD FARMING
In the February 28th newsletter, we mentioned that stablecoins could be used for yield farming. This week, we’re finally explaining what that is and a simple way for you to try it yourself.
Many Decentralized Finance (DeFi) applications require a lot of liquidity in order to operate at scale. For instance, Aave is a DeFi app that offers a loan program just like banks. In order for them to offer loans, though, they need a borrower and a creditor. The borrower side of things is simple—someone who wants a loan requests one. The amount they can loan out is capped by the amount of liquidity they have available—just like banks are capped by the amount they have under management. In order to solve this problem in a decentralized fashion, Aave allows anyone to become a creditor in their service. To incentivize this, they give what is essentially an interest rate.
Since multiple protocols offer different interest rates or “yields,” yield farming involves using code to find the best place to stash your liquidity to receive the highest yield on it.
One of the first yield farming applications is Yearn Finance which allows you to surrender your sUSD, Dai, TUSD, USDC, and USDT to it, and it finds the best yield opportunities for you automatically (via BeInCrypto). You can try it by simply connecting an Ethereum, Fantom, or Arbitrum and then selecting what “pool” you want to deposit your liquidity into, and it calculates your yearly yield.
While this may seem like an obvious way to make passive income, remember that crypto protocols are risky, so use your judgment before investing. Still, it’s a great way to get exposure to reasonably high returns after simply plugging in a wallet.
Table Talk
CRYPTOCURRENCIES RE-STABILIZE
Although Bitcoin narrowly recorded its eighth straight weekly red candle at the time of this writing, certain performance indicators appear to signal that the crypto sector is trending bullishly, at least temporarily.
In last week’s newsletter, we wrote about Terra’s collapse and the resulting evisceration of the overall crypto market. This week, we are highlighting evidence that suggests more bullish days may lie ahead.
The graph below from crypto research company Messari averaged the top ten assets by market cap from all of the web3 sectors from May 13th to May 20th.
As we can see, DeFi, smart contract platforms, currencies, web3, and gaming assets all trended upward from the previous week. Even with the massive capital exits of the previous week due to investors questioning the overall stability of crypto, significant liquidity has moved back into the ecosystem. Though there’s high price volatility, its a promising indicator that crypto is here to stay.
Although record high interest rates and inflation continue to wreck the stock market and the crypto industry, keep an eye out for more positive cryptocurrency price movements in the coming weeks. Stay the course and find crypto assets that are building for long term.
NFT Buzz
REPTILIAN RENEGADE RUG PULL
This past January, an NFT project named Balloonsville stole over $2M in investors' money after the founders abandoned the project a couple days after the mint in classic rug-pull fashion. The person behind the project revealed himself to also be the “mastermind” behind another NFT rug pull named Doodled Dragons in a series of tweets before deleting the Balloonsville’s Twitter account and disappearing into oblivion.
Fast forward to this past week, and the same culprit resurfaced, this time under the pseudonym Fuopist. A project labeled Reptilian Renegade, a collective of 4,000 evolved, unique, intelligent, and misunderstood lizards roaming around the Solana ecosystems’ meadows, was the talk of NFT Twitter both before and after its mint on May 14th.
Reptilian Renegade Lizard #904
At first, the project was hailed as the next big collection, and it had the stats to support that claim. The collection sold out, and the floor price (1 SOL) climbed to as high as 47 SOL soon after the mint. However, this past Thursday, the official Reptilian Renegade account began tweeting the exact opposite of what you would expect a legit project to post before deleting their account.
The account, which had more than twenty thousand followers, began randomly calling out other influencers in the space for certain shady behaviors through a series of tweets, and Fuopist, the person who was tweeting, even compared himself at one point to Batman. Vengeance?
In the criminal’s eyes, as he did with Ballonsville, stealing peoples’ money was a righteous act due to him exposing some of the inherent flaws present in the NFT space. The launchpad or marketplace that was used to facilitate the project, Hydra Launchpad, received some rightful backlash following the rug. In defense of Hydra, the platform has managed to do some solid damage control by creating a new Twitter for the project and regaining control over secondary sales.
It is clear that launchpads are going to need to put more effort into their doxxing, or verification, of founders in the future to reduce rug pulls. One thing that the Reptilian Renegade founder bragged about was tricking the Hydra team by using a Fake ID and using a Filipino accent to disguise himself during the doxxing process. Although he is right that increased security measures need to be in place, his lack of self-awareness in justifying his actions is clear.
Our thoughts go out to those who were rugged.
DeFi Demographic
ROBINHOOD ANNOUNCES SELF-CUSTODY WALLET PROJECT
Three weeks after FTX and Alameda Research founder Samuel Bankman-Fried acquired a 7.6% stake in Robinhood, the popular retail trading app, they announced they are deploying a self-custody crypto wallet (via Protocol, Robinhood).
While crypto trading has been available for the last three years on Robinhood, this is notable for a few reasons (via Fortune).
Robinhood, in the same model as its stocks, will be eating the transaction fee for purchasing crypto and transferring the crypto to the wallet. Likely it will still be selling transaction data to institutional investors, but this should simply serve as a reminder that there’s still no such thing as a free lunch.
What this also enables, though, is users who bought crypto on the platform can now move it off the platform and so can treat it as more than just a speculative asset. In other words, they can now access the full ecosystem of the internet of money, and it should provide the same incredibly accessible on-ramp that Robinhood provided for stocks roughly 9 years ago. Bullish.
Final Cup
The majority of web3 asset classes, as a whole, bounced back from a rough last week. Let us see what the upcoming week has in store
A famous rug puller struck again, this time using reptilian art to steal peoples’ money and even comparing himself to Batman. Additional security measures will need to be included in launchpad sites to lessen the prevalence of rug pulls
Robinhood announced they are in the process of developing a self-custody crypto wallet. It’s a bullish move by the corporation in a bearish time.
Meme of the Week (via Reddit)
Pat + Ari ✌️
Disclaimer: None of this is investment advice, financial advice, or trading advice. CRYPTOPONG does not endorse any of the cryptocurrencies, DeFi applications, or NFT collections mentioned in this article. Perform your own due diligence and/or consult a financial advisor before investing.