The rise of a new meme coin

April 21, 2023 Stan

”We’re so back” → “It’s so over” → “We’re so back” → “It’s so over.”

I’ve lost track of how often I’ve seen this doom loop on Crypto Twitter this week. What keeps me from going insane is the ability to zoom out (and not check the charts 100x times a day).

Here’s what we got today:

Gary’s Congress Hearing. SEC Chair testified before the Congress
A Mysterious +10MM Hack. The sophisticated hack that targeted OGs of Crypto
The Rise of the $PEPE. The hyperbolic rally of this new meme coin (and why you should be careful)

Reading time: ~9 minutes

Today’s email is brought to you by Metronome – their smart farming system is officially live!

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📉 The Markets

“It’s not what you buy, it’s what you pay. And success in investing doesn’t come from buying good things, but from buying things well. And if you don’t know the difference, you’re in the wrong business. Back to top.” – Howard Marks

REGULATIONS

‍⚖️ Gary’s Congress Hearing

On April 18th, Gary Gensler testified before the House Financial Services Committee. And Crypto Twitter had a field day.

Who is Gary Gensler? The SEC’s current chairman. He hasn’t been exactly the most Crypto-friendly person. He has stated that he has never owned Crypto, but he taught a course about Blockchain at MIT. 🤔

Here’s an excerpt from his hearing yesterday:

The SEC’s hostile stance toward crypto has only accomplished one thing: Pushing the crypto industry overseas. This isn’t just a theory… it’s happening.

Congressman Warren Davidson introduced legislation that aims to remove the title of Chairman of the SEC and replace it with an Executive Director, who is meant to report to a board. But does that really solve anything?

That’s the thing about puppets. You get rid of one, and then they’ll be replaced by another (by the people who are really in charge).

TOGETHER WITH METRONOME

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🚨 The Mysterious $10MM+ Hack

Over the last 72 hours, a mysterious hack has drained over $10MM worth of tokens and NFTs from OG crypto users.

Taylor Monahan, former CEO and founder of MyCrypto, has been investigating the hack and has made some interesting details public.

According to Monahan, the hacker has been draining OG crypto users since December 2022.

The hacker appears to target people who are more “crypto native,” including:

Individuals with multiple wallet addresses, and
Former employees of the web3 space.

So far, the stolen amounts discovered exceed 5000+ ETH across 11+ different chains (BTC, ETH, LTC, Solana, Tezos, etc.).

Here’s the problem: Nobody knows how the hacker has managed to pull off such a sophisticated hack.

A few theories:

The hacker got their hands on a big data cache from over a year ago and created a system to methodically drain people.
Lastpass. The password software giant was exploited months ago. It’s possible some people could’ve uploaded their private keys to their LastPass vault.
Apple’s operating system has had a serious vulnerability in the past few days.

“But Edgy, everything is on-chain. How can it be that hard to find the hacker?”

Edgy’s Advice: If you have all your funds connected to a single private key, its best practice is to migrate funds, split up assets, and get a hardware wallet ASAP (I recommend using Ledger Nanos and ordering them directly from the company).

As always, please don’t store your seed phrase poorly. And never store it online. For more solid OPSec practices, check out this thread:

While MetaMask has already denied claims of a possible software exploit, investigations are still ongoing. We hope they figure out what’s causing this.

PROJECT SPOTLIGHT

🥞 Maple Finance brings U.S. Treasury Yield On-Chain

I’m fascinated by the intersection of OnChain x the Real World. Well, DAOs can now access U.S. Treasury yields on-chain.

Short-term Treasury yields have steadily increased over the past few years. They’re currently sitting at around 5%. Since DeFi yields have stayed relatively low, accessing real world Treasury yields is a big deal for DAOs. This provides a consistent yield source (independent of Crypto’s volatility).

DAOs can gain access via Maple Finance’s Cash Management Pool.

What is Maple Finance? An on-chain capital market. They offer isolated lending pools that credit experts manage. Users deposit money. And institutions, such as market makers or V.C.s, take out loans from these pools.

What is the Cash Management Pool? A product focused on non-US DAOs, Web3 Treasuries, offshore companies, etc. It will constitute a new way to access U.S. Treasury yields.

How does it work? Web3 institutions can deposit funds into the pool. The pool then directs those funds to a Special Purpose Vehicle (SPV) which buys the Treasury bonds and holds them with a regulated broker. The yield (minus fees) is passed to depositors.

As of now, depositors must go through a 15-minute onboarding process to complete Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) processes. And it’s only available to non-US entities.

So this story doesn’t directly affect me or you. I just thought it was refreshing to see more products developed that could facilitate more adoption.

CHART

📊 The Rise of the $PEPE

Do you remember when the entire world went wild for Dogecoin in 2021? Memecoins will always have a place in Crypto.

Well, there’s a new memecoin in town that’s generating buzz.

It’s called Pepecoin.

It was launched last Sunday. By this Thursday, it had a market cap of over $165MM. In terms of returns, that’s more than 4,500x.

First, what’s the PEPE character? He’s kinda the unofficial mascot of Crypto degens. You’ll see Pepe memes everywhere, and there are plenty of anons using pics of Pepe as their profile pic.

Why is this madness happening? Memecoins and micro-caps are largely an insider’s game. A few people will launch a coin. They’ll partner with “influencers” to pump the coin. And once investors have enough of the coin, they’ll dump it.

Here’s an interesting investigation.

You can see the origins of the memecoins and how a group of influencers gave the coin its initial traction.

A suspicious group of wallets holds 10% of the total supply: If they decide to dump, everyone else will be left holding worthless tokens.

Speculators and reflexivity: Crypto markets are irrational. People will buy a token if they see others making money. But by the time they hear about it and ape in, it’s probably too late.

DOGE is the ninth largest cryptocurrency with a market cap valued at over $11.6B.

The $PEPE token has no connection to the actual Pepe the Frog meme or Matt Furie, the meme’s original creator. But the association with the meme has been enough for the token to take off absolutely.

That’s Pumpmentals in action.

I don’t really know what will happen to this coin. It may be completely irrelevant in a few weeks. Or it may join the ranks of Dogecoin and Shiba Inu. Either way, I’ll be staying away.

One thing to be careful of is the memecoin rotation.

“Hey, did you miss Pepe? This [shitcoin] is the next Pepe. Don’t miss out!”

People are trying to take advantage of your FOMO.

Remember: technologies keep changing, but human nature doesn’t.

🌎 What’s Happening?

📰 Industry News

Societe Generale, Europe’s 7th largest bank, launched a Euro-pegged stablecoin. It will be backed by cash and liquid securities. Its heavily permissioned nature of it was criticized on Twitter.

Starbucks launched another NFT collection called ‘First Store’ collection. This is an edition of 5000 stamps priced at $99. They were launched on the Polygon Network.

Nike is selling digital boxes with virtual sneakers for $19.82. The “first digital-creation collection” on. Swoosh is the blockchain-powered platform announced by Nike.

United Arab Emirates Security Regulator will start accepting applications from companies looking to provide crypto services in the country. This regulatory clarity will be helpful for their crypto adoption.

Donald Trump dropped the second series of the Digital Trading Card Collection. The release of this second series has sent the first collection’s price downward.

🍿 DeFi Bites

RocketPool deployed its Atlas upgrade. Changes include enabling withdrawals and lowering the amount of ETH required to create an Ethereum validator.

Rarible DAO started discussions on retroactive token airdrop for members active in governance. The intent was to express gratitude to the members.

PancakeSwap proposes reducing token inflation. The proposal targets a low annual inflation rate of 3-5% for CAKE.

Decentraland is voting whether a $150k grant should be approved to integrate major e-commerce platforms. It will be used to help brands to establish and manage their virtual stores in Decentraland.

Lido DAO is discussing accepting Arbitrum’s airdrop and using the claimed ARB tokens as emission rewards to provide incentives for using wrapped staked ether (wstETH) throughout the Arbitrum ecosystem.

MakerDAO approved a vault for Coinbase Custody with a maximum limit of $USDC 500MM. Coinbase Custody will pay a 2.6% annual yield for Maker’s money.

🧠 Twitter Alpha

An epic battle is brewing in DeFi.

This saga, known as “The Liquidity Wars,” tells the tale of intrepid innovators vying for supremacy in the realm of perpetual swaps.

An in-depth review of the house pool designs in @GMX_IO @GainsNetwork_io and @synthetix_io 🧵 pic.twitter.com/02ihK2OIGh

— Winter Soldier ❄️🙋🏻‍♂️ (@WinterSoldierxz) April 18, 2023

An Analysis of the On-Chain Perpetual Landscape📊

The decentralized perp-exchange sector is primed for 10-20x growth in the coming years.

A comprehensive 🧵 comparing $DYDX, $GMX, $KWENTA, $GNS & more👇 pic.twitter.com/R0TnI5jlJZ

— Thor⚡️Hartvigsen (@ThorHartvigsen) April 18, 2023

Research Tips:

1. Set time aside daily for deep research, like reading articles from protocols.

2. Create a Kanban board to keep track of narratives.

3. Keep track of major upcoming events with a Calendar. You can create a “Catalyst Calendar.”

4. Tweetdeck + Lists

— Edgy – The DeFi Edge 🗡️ (@thedefiedge) April 19, 2023

1/ It’s been 24 hours to reflect on Chair Gensler’s absolute train wreck of an oversight hearing yesterday.

Schadenfreude is satisfying, but here’s the substance of how ineffective, and out-of-touch the Biden admin’s financial regulators are right now.

— Ryan Selkis 🪳 (@twobitidiot) April 19, 2023

We need to do better at hammering home the point that crypto is just software.

Regulating a “decentralized exchange” as a “securities exchange” has superficial appeal…until you realize that a DEX is just software (an app) that, when deployed onto other software (a…

— CryptoTaxGuy.ETH ⌐◨-◨ 🦇🔊 (@CryptoTaxGuyETH) April 18, 2023