Shadows Yield to the Renaissance's Dawn.

The Castle Chronicle: Volume 22

Author

unex
June 22, 2023 • Est. Reading Time: 18 minutes

Hans was busy, so unfortunately no Macro Update from him. Instead, we have Francesco with a project overview. Enjoy!

 👀 What’s to Come in Volume 22

🔑 Key News: Headlines, Exploits, Continued Adoption, DeFi Updates, New Projects & more — from CJ

🔥 Hot Narratives: Level on Arbitrum, Curve Wars heating up? — from unexployed

📉 HTF Price Action Scenarios: TA on bullishness — from Vlad

⛓ On-Chain Sleuthing: Amber Group selling $GMX, DeFi Surfer capitulated?!, Level Finance is BOOMING, and the current most popular farms — feature along with Smart Money Moves from Cl & Amir Ormu

🔬 Francesco Feature: Project overview of Momoka.

⚔️ A Call to Arms

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

🔑 Key News

Major Crypto Headlines

  • Binance US & SEC agreed to work out deal to avoid full asset freeze

  • Delio announced that withdrawals will be suspended

  • FED announced that policy interest rates remain unchanged

  • $USDT "depeg" imbalance context

  • Binance leaving the Dutch market and deregisters in UK amid regulatory woes

  • BlackRock's iShares Files Paperwork for Spot Bitcoin ETF

  • Celcius announced that it will sell altcoins in July

  • zachxbt sued by MachiBigBrother

  • Crypto.com operates internal proprietary trading desks

  • Ethereum developers consider raising max validator limit from 32 to 2,048 ETH

  • UK Crypto, Stablecoin Laws Approved by Parliament's Upper House

  • Crypto Exchange Backed by Citadel Securities, Fidelity, Schwab Starts Operations

  • Deutsche Bank applies for digital asset license with German regulator

  • Binance Sets Up Bitcoin Lightning Nodes to Ease Deposits and Withdrawals

Exploits and Updates that happened this week

  • FPGcrypto halted withdrawals and deposits after cyberattack, losing $15-20M

  • Beosin Alert discovered critical stack overflow vulnerability in Sui, Aptos and others

  • Midas Capital exploited for $600k

  • Sui Network dodged shutdown after CertiK discovered ‘Hamster Wheel Attack’

  • HyperLiquidX suffered oracle attack on HLP

  • Helio Money hacked for $612k

  • Pawnfi exploited for $820k

  • Arablocks exploited for $131k

Useful Weekly DeFi Updates

  • Aevo opened its doors to the public

  • Maverick Protocol announced token utility for $MAV

  • Tenet announced their new product LSDC

  • Cashmere Labs revealed blueprint

  • Eigenlayer deployed Stage-1 on Eth mainnet

  • MakerDao increased Dai Savings Rate to 3.49%

  • Polkadot revamped their governance system

  • FraxFinance to launch Ethereum Layer 2 called Fraxchain

  • Gains Network delisted stocks and indices

  • Crocswap rebrand to Ambient Finance

  • BNBChain releases opBNB

  • Frax Finance founder supports proposal for 'aggressive' FXS token buybacks

  • Etherscan integrating OpenAI

  • DefiLlama and 0xngmi launched a crypto calendar

  • GND Protocol announced gETH

  • Ether Fi opened staking to the public

  • UnidexFinance introduces v3 perp aggregator

  • Osmosis cuts token inflation by 50%, plans fee sharing in OSMO 2.0 update

Some interesting projects to look out for:

  • Gensyn: Marketplace protocol to compute for AI workloads

  • Autonolas: Own & decentralize your off-chain processes with our open-source software stack

  • Radiate Protocol: Earn boosted yield on Radiant with no lockups

  • XAI Games: Decentralized game console & Layer 3 developed by OffChainLabs built on Arbitrum

  • Concordia: Recently raised $4M, multi-chain risk and collateral management protocol

  • GNL Protocol: Built on top of GND, lending protocol for concentrated liquidity LP positions

  • Mori Finance: Next-gen stable asset protocol on ETH

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

🔥 Hot Narratives

Arbitrum becoming a Perp DEX Parade

The Arbitrum ecosystem has been notorious for the amount of perp DEXs that have been launched over the past year.

Well, another one is now live, but this time its actually quite a based one: Level Finance.

The project originates from the Binance Smart Chain, like $GMX in its early days, and therefore already has an established user base. The project has an interesting model where it incentivizes trading volume in such a way that it is a net positive to the protocol. Additionally, Level Finance uses tranches which is more efficient and cater to a wider audience.

Level received some criticism as on-chain sleuths in the past have pointed out that only a handful of traders make up for the volume. That being said, we are curious to see how much traction Level will gain on Arbitrum.

That being said, a recent proposal outlined the plans to allow a “9-figure investment company” acquire a $20mln stake in Level. If approved, the investment will be done using spot TWAP.

I wanted to close this by highlighting recent metrics from Level. Key metrics, such as volume, fees, and OI, are all having a significant uptick. I will refer to this amazing Dune Dashboard for a more detailed overview.

Daily fees of Level Finance. As you can see the very last day just started, but the day prior is a huge uptick.

Curve Wars heating up?!

With the recent introduction of $crvUSD and its success, it may be a prime time to pay attention to the Curve Wars narrative again. If you are not familiar with what the Curve Wars exactly is read this article.

Especially stablecoin projects like Frax were heavy into acquiring and using voting power from Convex and Curve.

I hear you ask; aren’t we in a bear now? This isn’t relevant right?

Well, it may be not so interesting now, but Powell called stablecoins a form of money validating its value. Furthermore, now is the time for stablecoin projects to prepare themselves for once the tide turns.

Surprisingly, one project that understands this is Reserve Protocol, currently the 7th largest DAO regarding CVX balance. Yesterday, the protocol announced a $20mln investment in CRV, CVX, and SDT with the sole purpose to increase their influence in the Curve ecosystem.

Last bull, stablecoins were one of the biggest growth sectors within crypto. They are also crypto’s biggest use case. Therefore it is important to keep your eyes on Curve as it’s the centerpiece of stablecoins.

Read up on Curve Wars if you haven’t. Understand the underlying mechanics. It will pay off in the bull.

📈 HTF Price Action Scenarios

Gm frens!

  • Last week I wanted to see a clear breakout to the topside before considering longs

  • Reaccumulation playing out

  • New momentum to the topside

  • Waiting for daily close

If the daily closes bullish, I’ll be looking for longs

  • Follow 1h trend

  • Long new breakouts

  • Get involved on re-accumulation

Courtesy of Vlad - trend-based trader and MentFX student

⛓ On-Chain Sleuthing

Amber Group selling some $GMX

Investment firm Amber Group recently unstaked 20k $GMX, roughly $1mln at current prices, on the 15th of June and send 19.2k to Binance a day later. Whenever an address sends tokens to a central exchange we safely assume that the sole purpose is to sell it there.

Amber Group still holds 90k $GMX (staked), which is about $4.7mln.

Ethersole remains bullish on $UNIBOT and bought more

CT persona and founder (correct me if I am wrong) Ethersole of PlutusDAO remains bullish on $UNIBOT and he bought a bunch more tokens.

Andrew Kang back trading DEX perps

Andrew Kang is notorious for his fierceness in DEX perp trading. Sometimes having millions in longs or shorts on GMX.

Well, he is back, but it seems that he switched to MUX Protocol. Cool to see a guy like this trade on MUX as it brings validation to the protocol.

DeFi Surfer bearish?

CT persona DeFi Surfer has been quite bearish on the Twitter timeline. Accordingly, Castle Cap members noticed that he has exited most of his long positions in recent days and seems to have cashed out most of his crypto bag towards fiat.

Going off of his recent transactions he sold the pico bottom on the 10th of June and exited on Kraken the same day.

Will this be a smart move or as unexployed likes to say:

Smart Money Moves

🔬 Francesco’s Feature: Momoka

What is Momoka?

The biggest challenge about Web3 socials (or blockchain-based socials), is how you deal with synchronization, with the amount of data and the transactions happening in the network, and how you process them.

By using L1s, you are always going to be limited by the block size and the block space. In fact, how many transactions you can create and execute is limited: there’s always a cap due to infrastructural limits.

As such, using a blockchain is really good to secure your network and tokenize the value you are creating, however, it is pretty tough to scale and integrate in a social network environment (e.g. in the case of transactions where you only want data availability and don’t need the full security guaranteed by a blockchain).

Data Availability (DA) works in a different way than a blockchain: for instance, you can create as much data as you wish, and store it on a DA layer, as such you are not limited by block size, but rather can transact as much as you want.

This is the necessary scale to take Web3 social to the next level and wider adoption.

That’s how cheap Momoka is:

What is the use case here?

To synch and submit Lens posts and comments.

But also anything else where you need a massive scale for data.

What Momoka does is leverage this DA layer, but also works as a verification protocol for data.

Effectively Momoka can be defined as a “data verification protocol”.

It is a tool that allows the creation of transactions without the need to send them back-on chain, putting them on a DA layer, but also a way to verify that these transactions are correct.

Momoka allows you to run either a:

  • Submitter: submits data in a particular form;

  • Verifier: look into the data submitted in the DA layer and has been executed in the correct way.

Data verifiers have to come up with a network agreement consensus that the data is correct (incentives/slashing models can be introduced).

What this means is that there won’t be a tokenized version of a comment on-chain, BUT, if the comment becomes interesting, then it can always be pulled back on-chain:

For instance, if they get enough likes, then comments can be converted into on-chain assets that can be collected.

WTF is an L3?

What Momoka really does is create blockchain transactions, but they are not rolled on L1 or L2. It submits them for verification and stores them on a DA layer (e.g. similar to an L1 infrastructure).

There’s not really a perfect categorization, as Momoka can be intended as an L2 for data availability + Data Verification Aspect = Hybrid Model, L3 (Data Scaling Solution)

Momoka is an Open Source software, that can be adapted and forked for further use cases (e.g. not everyone may be familiar with everyone seeing their comments).

In fact, the Lens community is heavily involved in providing feedback: from the creation of Metadata standards to involvement in Lens Improvement Proposals, giving anyone the chance to submit proposals, and promoting open discussion.

Three fundamental proposals are already up for vote:

Currently, Momoka handles between 25-50% of all transactions on Lens:

Food for Thought

What Lens is doing is incredibly impressive.

They are constantly building and setting the basic infrastructure that will sprout the future of Social Media.

Sure, the current experience may be less optimal than the traditional social media we are used to. But solutions like Momoka are key to abstracting the backend complexity of blockchain-based social media and leaving users with a simple and plain UX.

The current developments of Lens are hugely undervalued and not enough attention is being paid to them. Also, there’s lots of speculation about it:

Is Momoka going to be the first L3 Token to airdrop?

Research by Francesco

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

Virtually yours,

Atomist & The Castle

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