GM, and welcome to another edition of The Castle Chronicle.

ETHDenver is coming up, and if you’re around, make sure to say hi to our founder, Atomist - he tends to walk around with a big pointy wizard hat.

Here’s what’s happening today:

• 🟢 $Kaito – Everything you need to know about the $KAITO airdrop

• 📈 Price Action – Are there any interesting opportunities while BTC is going sideways?

• 💙 Arbitrum Corner – The Next Growth Phase

Everything you need to know about the $KAITO launch

The $KAITO airdrop has been one of the most awaited launches.

It was impossible to miss the predictions for YAPS, with many forecasting $100+ for each YAP and already planning their retirement.

Well, as always, it did not really go that way.

Most users received about 5-20 $KAITO for each yap.

However, the token distribution was not only about yaps!

This was one of the most interesting aspects of the Kaito launch. Instead of a linear distribution, they went one step beyond a linear distribution and used their algo to take into account:

• Alignment with $KAITO: if you’ve bad mouthed them you can expect a possible penalty, if you have engaged with them repeatedly, by writing about them, voting on Kaito connect etc., you would have gotten a bonus.

• Regional presence

• Emerging Yappers

• Onchain reputation

We believe this is indeed an interesting system that solves some of the issues they would have encountered with a linear airdrop distribution and encourages the creation of a loyal user base.

The best way to get loyal users is… check notes… making them rich.

While many projections expected a 20%+ airdrop, Kaito has found the sweet spot between ensuring users are rewarded well, without creating issues for the long-term success of the platform.

How did the token perform post-airdrop?

Since its launch, Kaito has been listed on most Tier 1 exchanges.

The token has launched around $1-1.20. After the launch on Binance, it has dropped down to $0.80. However, today the price of Kaito is already at $1.8, showing signs of growth.

Nonetheless, only about 30% of the airdrop has been claimed already, leaving room for more airdrop dumps:

The selling pressure post-airdrop was limited, given the 10% initial community distribution:

What about NFT genesis holders?

Kaito has reiterated that Genesis NFTs will have a core role in the future of the platform. As part of this, they used their royalty fees to sweep the NFT floor. What do they know? lol

What can users do with $KAITO?

$KAITO will play a critical role in the Kaito ecosystem.

Kaito has repeatedly reiterated its long-term vision for the platform, with plans to expand beyond Web3.

For now, users can currently stake their $KAITO for a 10% APR:

Furthermore, those who are staking over 75% of their airdrop can now show off a “holder” badge, which can potentially give access to more benefits in the future:

All in all, $KAITO’s launch has been extremely successful and will probably serve as a blueprint for other projects looking to improve their token distribution and ensure it goes into the best hands possible.

📈 PRICE ACTION

Nothing new on the BTC chart. Still consolidating in a weekly momentum cycle. Although there’s imho nothing much to do, let’s talk a little bit about existing opportunities in crypto.

Here's what we can see:

• Healthy uptrend

• Active momentum cycle

• Sideways price action

I want to talk a little bit about relative strength again. If this chart was an index, such as the US100, NASDAQ, or QQQ (all the same thing), this price action would provide ample opportunity in individual stocks. It is precisely during moments like these when it’s easy to spot the relative strength of individual stocks compared to the leading index.

So, if we take a look at some big caps and their relative performance compared to BTC (assuming BTC acts as an index), we should be able to see many individual cryptos that are popping off, right? This was especially true in past “alt seasons” where we could see significant outperformance and coins pumping left and right.

Is that still the case, though?

If we look at relative performance in the last 30 days, we can see a few outliers doing better than BTC, but it’s really not much of a spectacle.

Once we get to the 6th highest outperformance it’s only by 13%.

This is a rather disappointing view. But if you really want to get into some crypto trades, OM, XCN, and S make sense to follow, as they are showing significant strength relative to BTC.

Don’t trade out of boredom frens.

It’s a much better idea to wait for a favorable environment and outperform the slot machine addicts.

Trade responsibly and I’ll see y’all next time!

Not following what I’m talking about? Check out my quick cheatsheet to briefly explain how I approach a chart.

Courtesy of 0x_Vlad - trend-based trader and MentFX student

💙 ARBITRUM’S NEXT GROWTH PHASE

Arbitrum’s Next Growth Phase

We’ve seen a change in the winds in recent weeks.

The Arbitrum Foundation is throwing its- weight around, Entropy Advisors are taking a more opinionated stance and even Marc Zeller’s ACI is getting involved.

Despite this, the DAO has already been moving steadily to optimize treasury funds, reintroduce incentives, and refine strategy & operations.

With millions in ARB and ETH actively being deployed, protocols and builders have a prime opportunity to align with the ecosystem’s next growth phase.

Here’s what’s happening right now and why it matters.

Incentives Will Return

After an incentive detox, new programs are being proposed to drive user engagement and liquidity on the chain:

• MAGA 2025 (Make Arbitrum Great Again) – A Jumper x Merkl initiative aimed at boosting liquidity and transaction volume - focusing on increasing the flows of specific assets to the chain.

  • Check the full proposal here.

• ARB Incentives for dApps & Protocols – A Patterns proposal to fund user acquisition Web2 marketing style.

• Word on the grapevine is that one or two more structured frameworks may be on the way too 👀 

• It’s also worth noting that the next ARDC Research task will assess and recommend a path forward for incentives on Arbitrum, led by Castle Labs and Defillama Research.

DAO Treasury Deployment & Diversification

The DAO is actively deploying its treasury instead of sitting on idle capital:

• Stable Treasury Endowment Program 2.0 – After a successful Pilot, the 2nd iteration is now approved, with the DAO set to deploy 35M ARB into real-world assets (RWAs) to build a sustainable, yield-generating treasury for long-term ecosystem growth.

• 7,500 ETH Treasury Management Strategy – Seeking DeFi protocols to put ETH holdings into yield-generating and ecosystem-supporting strategies, all managed by structured teams to oversee fund deployments.

Operational & Strategic Restructuring

Governance efficiency is being improved through restructuring efforts:

• Strategic Objective Setting (SOS) - A structured framework to align Arbitrum DAO’s short- and mid-term objectives. This process has just kicked off and should firmly lock down the precise focus of the ecosystem and DAO for the next 2 years, which should go a long way to informing future operations.

• OpCo – A DAO-adjacent operations entity to execute strategy with greater efficiency has been approved by the DAO with a hefty budget, however, what this will actually look like is still quite unknown.

  But the appetite for full-time employees is clearly there.

• Delegate Incentive Program (DIP) – A $4.2M annual budget rewarding active governance participants, ensuring strong delegate engagement is still ongoing, with iterations of the program consistently ongoing thanks to Seed Gov. What will the next phase look like? Will we see consolidation to a smaller group of larger delegates?

Strategic Grants & Ecosystem Development

Beyond direct incentives, targeted funding programs are fuelling long-term growth:

• Arbitrum Audit Program – Brought forward by the Foundation, this is a proposed security subsidy program for early-stage projects. Whether this is run by the Foundation or the current stewards in the ADPC (Axis Advisory, Areta), this is a great comfort for builders.

• D.A.O. Grant Program - Season 3 – Continuing structured grants for ecosystem development, including Orbit-focused projects through the Questbook platform. Keep an eye out here, the ARDC will soon be dropping an assessment on all kinds of grants.

• Stylus Sprint Increased Budget – Additional funding was initially approved on Snapshot but will soon go to Tally. This will fund Stylus-related products and tooling from the likes of Pyth Network, Nuffle Labs, Trail of Bits, and Sylow, along with several already approved teams.

Arbitrum’s Next Growth Wave

Arbitrum has often been criticized for not chasing the latest trends and being a slow-moving machine across the Foundation, OCL, and the DAO. While short-term narratives have their place, the real value lies in staying true to long-term convictions of scaling Ethereum and making Arbitrum the best place for builders.

With Arbitrum just a few steps away from a Stage 2 rollup, it’s time for the DAO, Foundation, and OCL to roll up their sleeves.

We need to see action and execution from all parties, not just words.

We all remain committed to backing the best builders solving the most challenging problems in crypto - but we can do it in a much more strategic, structured, and cohesive way.

This is Arbitrum’s year.

We’re here for the long run.

We’re here to win.

Courtesy of Atomist - Co-Founder at Castle

That’s all for this week!

We hope your yapping paid off 🫡 

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.