The amount of FUD and turmoil in the markets are causing people to question their beliefs in this space. These are hard times, but hard times create hard men. Those who are still here will be best prepared for the next bull run.

Let it sink in that even though the US is taking a hard stance against crypto. Other parts, most notably the East, are showing more and more signs of adoption.

Join us and find out that crypto remains the most exciting industry 👇️ 

 👀 What’s to Come in Volume 21

🔑 Key News: Curve founder Michael Egorov sued, US regulatory challenges, Chinese bank uses ETH Mainnet & more from CJ

🔥 Hot Narratives: Uniswap V4, EigenLayer launch, and the ongoing USDT FUD by unexployed

📈 Macro Outlook: Simplified Round-up and Implications from Hansolar

📉 HTF Price Action Scenarios: from Vlad

⛓ On-Chain Sleuthing: Extensive piece on Andrew Kang, USDT swaps, and more from Cl & Amir Ormu

⚔️ A Call to Arms

Think you have what it takes to enter the Castle and contribute to funding and advising projects across the space?

Fill out an application form!

🔑 Key Crypto News

Major Headlines

• SEC Files Motion to Freeze Crypto Held by Binance US, which they then announced that they were suspending USD deposits and pausing fiat withdrawals

• Coinbase CEO states that they are not shutting down staking services

• Curve Finance founder sued by VCs

• Crypto.com suspends US institutional exchange service

• Vitalik calls for three mandatory 'transitions' for Ethereum

• RobinhoodApp ends support for Solana, Polygon, Cardano amid SEC exchange crackdown

• CFTC wins Ooki DAO case

• Airdrops will be banned in UK under new rules while a16z opens their first international office there

• US lawmakers file ‘SEC Stabilization Act’ to fire Gary Gensler

• XRP Prices Jump as Hinman Speech Released in Ripple Labs Filing

Exploits/Updates that happened this week

• Atomic Wallet hack most likely by Lazarus Group

• Arbitrum experienced short downtime due to a disruption in the Sequencer's batch poster

• TUSD mints via Prime Trust paused, TUSD depegs

• Sturdy Finance hacked for 442 ETH

• K3PR was subjected to profanity attack and lost $200k

Crypto Adoption is not stopping!

• Circle Singapore has obtained a Major Payment Institution (MPI) License from MAS SG

• Tel Aviv Stock Exchange completes proof-of-concept to tokenize fiat and bonds

• US House committee releases new stablecoin bill draft

• Chinese Bank BOCI issues country's first tokenized security on Ethereum blockchain.

Useful Weekly Defi Updates

• Aave $GHO Mainnet launch governance proposal live

• OptimismFND Bedrock & Polygon zkEVM upgrades successful

• Arbitrum airdropped more tokens to DAOs

• ENS Domains to bring blockchain to browsers with .box web domain name rollout in September

• Proposal for Uniswap & Balancer to use $ARB as liquidity incentives on Arbitrum

• MIM Spell launches Level Finance auto-compounder

• Curve Finance adds stETH market for crvUSD while crvUSD goes live on Conic

• Sudoswap v2 went live

• Native USDC arrives on Arbitrum

• Uniswap announces Uniswap v4

• PolygonLabs new announcement of Polygon 2.0

• Syscoin is launching Rollux on June 28

• Binance announces Launchpool for Maverick protocol

Some interesting projects to look out for:

• Open IBC: Built by Polymer Labs to create cross-chain chemistry to boost the Cosmos ecosystem infra

• Meanwhile: Recently raised $19M to provide Bitcoin-denominated life insurance

• Argus Labs: Raised $10M to build an Ethereum layer-2 network of gaming blockchains via its World Engine

• Aerodrome: Solidly fork built on Base, recently announced airdrop for veVELO stakers (Velodrome)

• Shogun Fi: Interchain market-making protocol built on Cosmos SDK and Celestia

• Partitura: Infrastructure for building composable smart transactions

• Ether Fans: NFTs backed by staked ETH powered by Ether Fi

• Hai: Multi-collateral fork of RAI on Optimism

• Sorella Labs: Onchain market maker

Courtesy of CJ - check out his telegram channel for daily news, projects updates and new releases

🔥 Hot Narratives

This week, Atomist has handed over the reins of the Hot Narratives section to me, unexployed. I am one of the more recent contributors to Castle Capital and have been helping Atomist with the finalization and weekly release of The Castle Chronicle.

Uniswap V4

Two days ago, Uniswap Labs announced the fourth iteration of its platform. There are a bunch of threads highlighting all the new features of V4, among my favorites are Uniswap’s own announcement thread and, unironically, Cochran’s TL;DR thread.

In a nutshell, the V4 adds a bunch of new features that have already been pioneered by Balancer, KyberSwap, and other protocols that improve capital efficiency and save on gas.

The biggest selling point is the introduction of so-called ‘hooks’; externally deployed smart contracts that add more customizability to the pools they are connected to. Examples given by the team are TWAP orders, volatility shifting dynamic fees, and contracts that internalize MEV generating more revenue for LPs.

I am looking forward to finding out what the community manages to build. I expect to see hooks that improve user experience with Uniswap pools. More importantly, there will likely be a new range of ponzis utilizing new hooks. The first movers with solid ideas will be a no-brainer ape, think of projects like $UNIBOT.

EigenLayer Beta Launch

Next up is the release of EigenLayer’s Beta. The project launched pools for LSTs (rETH, cbETH, and stETH), which will likely be rewarded for their early participation similar to what Swell is doing.

In celebration, the protocol is having a small NFT collection of 4 pieces that are free to mint. The first one is live right now on Zora. We don’t expect much to come from this, but there is always a tiny chance that minters are rewarded.

For those that need a refresher on what EigenLayer is, I gladly refer you to a thread posted by our very own Francesco. A TL;DR is that the protocol is an open marketplace to rent pooled security provided by Ethereum validators and aims to become an important pillar in improving the Ethereum ecosystem as a whole.

Apart from the memecoin surge earlier this year, there are only a few persistent narratives. The main one is the adoption of LSTs.

USDT FUD and potential depeg event

The current market uncertainty is reaching new highs as whales and other on-chain participants have been removing USDT exposure, causing the weight of USDT in the Curve 3pool and the depeg potential to rise.

As of writing USDT is approaching 80% of the 3pool, which has only happened twice. That being said, Tether has faced the same criticism and FUD for years now and the question is if this is any different now.

The infamous 0xd27 is also back and stepping in to protect the USDT peg by borrowing USDC and buying USDT. You can find his actions here.

At the time of writing it seems that USDT managed to restore its peg.

Yet again, crypto proves it is the wildest industry one can be in.

4.

💹 Macro Outlook

Previous Events

• 3/17 BTFP Starts 👉 SPX, Gold, Crypto rally

• 3/22 08:00 FOMC: 0.25% 👉 SPX & crypto fell, but gold rose and bond yields fell

• 3/31 12:30 PCE Inflation: A 0.3% F 0.4% P 0.5% 👉 SPX & crypto rally on softer print

• 4/12 18:00 FOMC Minutes: Admission of light recession toward EOY

• 4/13 PPI: A -0.5% F 0.1% P 0.0% 👉 Large fall leads to risk-on rally

• 4/20 UK 👉 10.1% inflation numbers spark sell-off

• 4/28 Core PCE, Personal Income/Spending: A 0.3% F 0.3% P 0.3%

• 5/4 03:00 FOMC: A 5.25% F 5.25% P 5% 👉 SPX sell off BTC and GOLD up

• 5/5 12:30 Nonfarm payrolls A 253k F 180k P 165k | Unemployment Rate: A 3.4% F 3.6% P 3.5% 👉 SPX up Gold and BTC down

• 5/25 NVDIA breaks ATHs

• 5/28 Debt Ceiling resolution 👉 BTC +4.5% ETH +4.3%

• 6/1 14:00 ISM Manu PMI A 46.9 F 47

• 6/2 12:30 Unemployment Rate A 3.7% F 3.5% P 3.4%

• 6/5 14:00 ISM Services PMI A 50.3 F 52.1 P 51.9

• 6/13 12:30 CPI A 4% P 4.1% | Core A 5.3% F 5.3% 👉 No large reaction

• 6/14 PPI A -0.3% F-0.1 P 0.2% 👉 No reaction despite large fall

• 6/14 FOMC A 5.25% P 5.25% 👉 No large response

Upcoming Events

• 6/15 Retail Sales MoM

• 6/20 Building Permits Prel.

• 6/30 Core PCE Price Index

• 6/30 Personal Income / Personal Spending

• 7/3 ISM Manufacturing PMI

• FOMC yesterday decided on a pause, but with a hawkish dot plot. The median terminal rate was 5.1% in March, and that has almost unanimously increased to 5.6% which indicates two more rate hikes this year.

• Bond yields seem to be adjusting to the higher guidance, but interestingly the stock market which theoretically should be inversely correlated to bond yields continued their march higher, led by mostly AI-related big-tech stocks.

• The US treasury account has also started refilling its account by issuing bonds. Many analysts consider this a negative net liquidity process, but so far traditional markets seem unfazed.

• This account tracks the progress in detail.

• Regardless of the strength in stocks, crypto has continued to underperform. Some think the crypto markets are front-running the eventual liquidity drain, while others think there may be some information asymmetry that is causing the bleed.

Crypto Options Markets

• There was a temporary spike in the IV for BTC and ETH around the FOMC meeting, which quickly dissipated back to more of the same suppressed IV environment.

• ETH IVs are still at around BTC levels, but it looks like the 30-day IV hit a bottom around 40(roughly 5.5% weekly move) and some larger buyers have been picking up some long vega(sensitivity of IV relative to spot price).

Courtesy of Hansolar - check out his telegram chat for all things options, crypto and DeFi

📈 HTF Price Action Scenarios

Gm, frens!

• Daily low breached

• Continuing to assume re-accumulation

• Daily demand is still in play

• I want to see a CLEAN breakout before looking for longs again

• I wouldn’t be short here, but I wouldn’t be long either

• Not an optimal market environment for trend-following systems

• Outperform the market by knowing when to stay out

Courtesy of Vlad - trend-based trader and MentFX student

⛓ On-Chain Sleuthing

Arca is LONG on $ARB, $DYDX, $LDO, and $UNI

Arca hedge fund is LONG $ARB. One of their known addresses received 1,485,000 $ARB from a CEX last week.

The $ARB transaction on DeBank (which also links to that wallet)

This is not the only coin ARca is bullish on. Last week, another one of their publicly known addresses received $700k worth of $DYDX, $1.2 million worth of $LDO, and $750k worth of $UNI from different CEX addresses. The crypto hedge fund seems to be in buy-the-dip mode and has focused on DeFi bluechips.

Wallet can be found here on DeBank.

CT persona are long on $UNIBOT

Midget, a well-known $GNS whale, is long $UNIBOT. The project is a first-mover in what seems to be a new crypto-niche: token trading bots and tools.

There are currently several on the market, each with a slightly different business model. $UNIBOT is by far the most popular product with a token.

The activity of his wallet can be observed here on DeBank.

A fellow Castle sleuth noticed another CT persona purchase large amounts of $UNIBOT, namely CryptoK33p3r.

Find these transactions through DeBank here.

He sent his tokens to 0×58…7c3d in order to migrate to the v2 version of the project.

Appodial buying $GMX

Appocial, known for his active participation in the GMX and BlueBerry communities, has been buying $GMX again. He was seen selling $GMX at around $70 and seems to be taking advantage of the current dip.

Kang’s $ARB liquidated and long on $RDNT

Last week we reported that Kang was long on $ARB and looping his position on Radiant to increase his leverage. Due to unfavorable $ARB price action, Kang has unwinded his position.

He proceeded to send $950k worth of $ARB to Binance, likely to be market sold.

You can find his address and transaction history here.

One token Kang is still long on is $RDNT. The same address that was used for the looping of $ARB still holds ~$950k of $RDNT. This makes sense as he has been making a lot of bullish tweets on the protocol over the past few days.

Now for our most interesting nugget of information regarding Kang, our sleuths have found something quite interesting.

Kang receiving rebates of his own trades?

The address 0xe7…e10a was connected to other known Kang addresses using this transaction. The address in question holds 2k esGMX, but has never held any GMX and indicates it must have a tier 3 referral code from the platform.

We can dive a bit deeper by logging onto GMX using impersonator.xyz and the 0xe7..e10a address to see which referral codes the account has registered. Various codes pop up, among others ‘ak’ (hmm, someone’s initials perhaps?) that has a combined volume of $1.4bln.

We think that Andrew Kang has been using this referral code in order to get back some money from his trades. As you can see the total rebates for that code are $208k.

Smart Money Moves

Smart Money Moves

• Observations reveal a notable decline in on-chain activity. Against this backdrop, Smart Money has been converting their holdings of UDST into alternative stablecoins.

• Smart Money deposited some funds into EigenLayer's pools recently. Unfortunately, the cap has been reached on these pools. Monitor on their dApp page if their capacity opens up.

• Among the favored platforms for smart farmers, The Ennead and Rodeo Finance have witnessed increased popularity.

• Additionally, the Granary stands out as a preferred destination for lending and borrowing specific tokens such as $ARB. Its reputation among smart farmers remains intact, attesting to its reliability and favorable terms.

• Raft, another prominent player in the space, has garnered significant attention from smart farmers due to its potential airdrop on the horizon. The anticipation surrounding this event has further bolstered its popularity within the community.

• Furthermore, Hermes Protocol and Ramses's Volatile Pools have provided smart farmers some solid yields.

• In a similar vein, Chronos, KyberSwap, and Velodrome's Volatile Pools have attracted a loyal following among smart farmers.

• Lastly, Vesper and Lybra Finance continue to be preferred choices for smart farmers as well.

Research and analysis by Cl & Amir Ormu

Thanks for reading, please follow us at Castle Capital and subscribe to The Castle Chronicle for an update each week!

Virtually yours,

unexployed & The Castle