Weekly Alpha Leak 🚰 Stop Fumbling the F***ing Bag - Lessons Learned From Aptos
Week of October 15-21, 2022
Capturing a piece of the highly desirable attention economy is super valuable and too many projects keep fumbling the bag with their launches and overall approach. Let’s take a look at some of the lessons we can learn from the misfortune of others.
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TL;DR:
💭 Aptos Disappointing Launch - Exploring the Attention Economy and Lessons Learned
💊 Top Bullets: Aptos launch, zksync mainnet live on Oct. 28, Mastercard partnership with Paxos for institutional crypto trading, Shopify partners with no-code Web3 commerce platform Novel, Fintech bank Nubank token on Polygon, Telegram app upcoming marketplace, a16z launch of new accelerator
📊 Data Highlights: Over the past month: Nansen Smart Money is flowing into Compound DAI, Compound ETH and WETH and flowing out of USDT, USDC and Rocket Pool. DeFi TVL ~ $51B, Uniswap TVL down 22% in past month, Sushi TVL up 40% in past month, GMX revenue down ~ 40% in past week, Polygon revenue up 300% in past week, In the past month: Ethereum: down 11% in NFT sales, Solana: down 31% in NFT sales, Magic Eden up 55% in unique active wallets and Axie Infinity is down 33% in the past month
🏦 DeFi Highlights: PancakeSwap proposal to deployment to Aptos, Binance did not intentionally delegate a large amount of UNI tokens to itself, SushiSwap proposal includes non-transferable “shares” in Sushi governance voting, Frax Finance to release liquid staking within 2 weeks, Hivemind deploying $25M into Algorand DeFi, Umee mainnet upgrade to unlock the full potential of the Cosmos ecosystem, Synthetix Perps v2 improvements coming soon, pSTAKE partnership with Anchorage Digital for institutional clients
🖼 NFT/Metaverse/Gaming Highlights: Magic Eden optional royalty payments, NFT marketplace Blur live + airdrop crates, Azuki released the PBT (Physical Backed Token), Magic Eden launch of Boots allows customizing NFTs by trading traits, a16z backed Everyrealm home design and virtual real estate game, X2Y2 "Trackable Royalty" records user's royalty choice, Rarible 2, FIFA launched virtual ecosystem ‘FIFA World’ in the Roblox metaverse, Ripple second wave of creators to join its $250M NFT Creator Fund, Tezos partnership for Shopify NFT loyalty program, Audius acquisition of SoundStage to provide virtual music experiences, Warner Bros. Lord of the Rings NFTs
💸 Exchange Highlights: Voyager Digital customers may recover about 72% of the value of their accounts, Gemini co-founder Cameron Winklevoss no longer a director at Gemini Europe, FTX and SBF under investigation by Texas’ securities regulator, Kraken latest to restrict accounts of Russian users due to EU sanctions, Coinbase waiving USDC conversion fees, Lionel Messi partners with Bitget
👨⚖️ Government, Regulatory and Legal Highlights: Mango Markets exploiter Avraham Eisenberg claims actions were legal, SBF posts views on regulation, Hong Kong considers direct retail participation, SBF agrees with CFTC Commissioner over disclosures and knowledge tests for trading, IRS draft instructions language changed to cover NFTs, Israel to test out using digital state bonds, Silvergate Capital postponing stablecoin to be regulatory compliant, Coinbase joins Grayscale against SEC for spot market Bitcoin ETFs
⛓ Crypto Highlights of the Week ⛓
Aptos Disappointing Launch - Exploring the Attention Economy and Lessons Learned
The highly anticipated launch of Aptos arrived this week and was incredibly underwhelming and disappointing, considering the $350M in VC funding raised, big names attached to the project and massive mindshare and collective attention of the crypto space that the project was able to capture. Attention is a difficult thing to harness, especially in today’s fast moving world, so being in a position where you are able to capture the attention of everyone in the room is incredibly valuable. Many projects would kill to be that relevant. Aptos squandered that initial momentum that they had right out of the gate and fumbled the bag hard, reminiscent of Evmos earlier in the year which was also another highly anticipated protocol that fumbled their launch due to technical mishap after technical mishap. Such a shame. If played properly, the potential is massive for teams that know how to execute and follow through with their initial momentum and grasp of the attention economy.
Let’s explore that concept a bit further. What could teams be doing better? What lessons can be learned from the misfortune of others? A non-negotiable first step is that the project has to launch FLAWLESSLY. The internet is brutal, cruel and will not hesitate to pounce on perceived weakness. Bugs, slowness, downtime, or just incompetence will ruin your first impression and first impressions are very important. If you screw up the technical aspect, then you’re far more likely to be dead in the water. Don’t even start with “oh there’s bound to be some technical issues in the beginning!” This is not what people want to hear, especially with so much VC backing and resources. Get it done right and impress!
Next, probably the biggest factor that needs to be focused on is MARKETING and BRANDING. Crypto is built on narratives, hype, attention and the story you can craft. Your presence and public perception has to be craftfully designed for your endgame. If people were completely honest with themselves, they’d realize that actual regular users don’t actually care about the transactions per second, consensus mechanism technicalities or what language it’s built on… That kind of stuff is only for us nerds. Normal users, you know - the ones who will eventually be using something on a large scale if you want it to be successful - they simply want something that works well and offers them an excellent and clean user experience. The exact TPS or other metrics aren’t relevant - the only speed that matters is that it’s “fast.” The less they have to think about how it works, the better. It all boils down to a story, to what the brand has defined itself as. Aptos did a poor job of meaningfully differentiating itself from the many, many, many competitor Layer 1 blockchains. What brand did Aptos have going for them? Built by a team of ex-Facebook employees and most people under the age of 50 don’t even like Facebook anyways. They came up with their own programming language, Move - like all the devs who are comfortable in Solidity are just going to up and learn this new language. Competitors such as Solana and Avalanche were far better at establishing a form of “community”, identity and brand. ‘memember all the red triangles in people’s usernames? Aptos might’ve captured people’s attention by launching during a time when it was easy to be noticed in a dead market, but what staying power did they have after that in such a crowded competitor environment?
Next, the financial aspect. Retail needs to be able to make GAINS. Retail is necessary if any of these projects want to be successful and it really seems that retail is tired of being shit on by predatory and shitty tokenomics. VCs making money isn’t the problem here, it’s that retail isn’t included in the plan and even more than that - they are almost openly being used as exit liquidity. “Here you go - buy our ridiculously overvalued bags for the nth time and get rekt.” The importance of financial incentive cannot be understated in crypto - if you want to win, then you have to make your community win as well. Enrich them, allow them to also profit and your project will be better positioned for long term success. You have to balance building a community with the inevitable speculator. After all, even diehard community members want to make money. At the end of the day - everyone is here to make money - never forget that. Retail market participants looked at Aptos’ shitty tokenomics and it seems we’re finally reaching a stage where they’re not having it. The message is clear here - tokenomics going forward have to be redesigned to not only be sustainable from a business point of view - but with the financial well being and success of retail in mind - ya know, the ones who’ll be actually using the damn project.
So, to summarize - if your project is lucky enough to reach a position where it’s able to capture such a valuable percentage of the attention economy, then they need to be prepared to bring their “A” game. DON’T MESS IT UP. The technicals have to be immaculate, the marketing and brand must be on point and you must make sure that your community actually stands to financially gain! Too many projects are out here fumbling the bag. No one yet has truly been able to tackle all these aspects correctly - everyone has to compromise on one aspect or another. (Sidenote - why do we have so many trilemmas in crypto?) The projects that are able to learn from all the mistakes of all these other projects will have a bright future ahead of them. Those who do not learn from the past are doomed to repeat it.
💊This Week’s Top Daily Bullets 💊
The Aptos Foundation released the tokenomics outline for the newly launched Aptos blockchain as it launched its mainnet this week. Transaction speeds and controversial tokenomics disappointed and received backlash right out of the gate. Aptos received $150M funding in July, led by FTX Ventures and Jump Crypto, with participation from Binance Labs and others. Aptos airdropped 20M tokens to early testnet users and spot and perp trading went live on most major exchanges
zksync is going live on mainnet on Oct. 28 and will make an announcement on tokenomics in the first week of November
Mastercard is launching a program in partnership with Paxos to let financial institutions offer cryptocurrency trading to their clients. Mastercard will handle the regulatory compliance and security — two core reasons banks cite for avoiding the asset class
Major global e-commerce platform Shopify partners with Novel, a no-code Web3 commerce platform, to make Web3 technologies accessible and approachable for all merchants
Nubank, a fintech bank in Brazil, introduced Nucoin token on the Polygon blockchain, paving the way for a rewards program for its 70M clients across Latin America
The Telegram messaging app is soon to launch a username auction platform - channels, stickers or emojis, could later also become part of this marketplace
a16z launch of new accelerator, Crypto Startup School - Investment from a16z ($500k), Mentorship from leading founders, Advice from domain experts, Network of fellow builders
These are just our top bullets, want more? Check out our daily newsletter:
What’s your take on this week’s news? Anything interesting that you have to say about these stories? Did we miss anything that should’ve been included?
💰 Fundraising Highlights of the Week 💰
Jasper raised a $125M Series A at a $1.5B valuation - AI Content Platform that helps you and your team break through creative blocks to create amazing, original content 10X faster
Celestia Labs raised $55M across two quietly closed fundraises this year led by Bain Capital Crypto and Polychain - values the startup at $1B
Investment app, Stash, closed a debt round for $52.6M and plans to expand crypto access for its customers
Stardust, a platform that provides development tools for crypto-powered game makers, raised $30M in a funding round led by Framework Ventures
WazirX founder’s layer 1 blockchain Shardeum has raised $18.2M in a seed funding round from over 50 investors, including Jane Street, Struck Crypto and The Spartan Group
Delysium, an AI-powered open world with diverse Free-to-Own universes, announced its $10M strategic funding round led by LA-based VC Anthos Capital
Yoloyolo, a new platform that connects NFT owners with brands to sell partnered merchandise, has raised $3.5M in a seed round backed that by ParaFi Capital, Mirana Ventures and Morningstar Ventures
📊 Crypto Market Data Highlights of the Week 📊
Over the past month: Nansen Smart Money is flowing into Compound DAI, Compound ETH and WETH and flowing out of USDT, USDC and Rocket Pool
DeFi TVL ~ $51B, Uniswap TVL down 22% in past month, Sushi TVL up 40% in past month
GMX revenue down ~ 40% in past week, Polygon revenue up 300% in past week
In the past month: Ethereum: down 11% in NFT sales, Solana: down 31% in NFT sales
Magic Eden up 55% in unique active wallets and Axie Infinity is down 33% in the past month
Nansen Smart Money:
Starting by taking a look at how stabled up Smart Money currently is. 28% and it looks like it was moving up and to the right but has recently begun to fall a bit.
Largest Smart Money Inflows this week: flowing into WETH and WBTC but $4M isn’t very much..
Largest Smart Money Outflows this week: flowing out of stables USDC, USDT, DAI. Outflows are considerably higher than inflows
Largest Smart Money Inflows this month: flowing into Compound DAI, Compound ETH and WETH
Largest Smart Money Outflows this month: flowing out of USDT, USDC and Rocket Pool
Nansen Hot NFT Contracts:
Highest Volume NFT collections of the past week:
Meta Bounty Huntress deployed 6 days ago and dwarfed all other volumes for the week with almost 14K ETH volume. Xaxa Land also deployed 8 days ago and comes in on this list with other big names like Azuki, BAYC and CryptoPunks.
🏦 DeFi Highlights of the Week 🏦
BNB chain PancakeSwap proposal for deployment to Aptos chain - recently expanded to the Ethereum blockchain
Binance CEO clarified that the exchange did not intentionally delegate a large amount of UNI tokens to itself, claiming it was a quirk of the Uniswap system. Previously reported that Binance delegated 13M UNI from its books becoming the second-largest entity by voting power in Uniswap DAO
SushiSwap is discussing a new proposed update that aims to form a new DAO structure called Meiji - includes the use of non-transferable “shares” in Sushi governance voting
Decentralized stablecoin issuer Frax Finance to publicly release liquid staking protocol within two weeks
Crypto investment firm Hivemind deploying $25M into Algorand DeFi is one of several catalysts attracting liquidity to the Layer 1 chain. TVL hit a new all-time high of $270M
Umee - mainnet upgrade to unlock the full potential of the Cosmos ecosystem
Perps v2 improvements coming for Synthetix soon
Liquid staking protocol pSTAKE has partnered with crypto custodial firm Anchorage Digital to allow Anchorage’s institutional clients to hold the PSTAKE governance token
🖼 NFT/Metaverse/Gaming Highlights of the Wee🖼
Magic Eden users will now be able to opt for optional royalty payments. Decision on how much royalties to pay will be passed to the buyer who will have three ways to set their preferred royalty percentages
NFT marketplace Blur is now live after four months of a private beta phase and is airdropping care packages with BLUR tokens to its users and those who list an NFT in the next 14 days
Azuki released the PBT (Physical Backed Token) - a new Ethereum token standard based off of ERC721. It ties a physical item to a digital token. Scan-to-own
Magic Eden launch of Boots - allows collectors to further customize their NFTs by trading traits and enables creators to sell traits as another creator monetization tool
Everyrealm, a metaverse content developer with backers like Will Smith, Paris Hilton and venture capital firm a16z, is launching a home design and virtual real estate game aimed at mature gamers
X2Y2 "Trackable Royalty" - NFT Marketplace contract to record user's royalty choice; Cross market API to check how much royalty was paid in the LAST buy
NFT marketplace Rarible has released a feature-packed update to its ecosystem called Rarible 2, which transforms the platform into an aggregated NFT marketplace and introduces the RARI Foundation and new RARI governance token rewards
FIFA launched its virtual ecosystem, ‘FIFA World,’ in the Roblox metaverse. It hopes to attract new football fans through games, immersive experiences, and exclusive rewards ahead of the upcoming 2022 FIFA World Cup in Qatar
Ripple second wave of creators selected to join its $250M Creator Fund focused on promoting the development of NFT-related projects on the XRP Ledger
Tezos blockchain partnered with Web3 automation platform Taco to allow Shopify users to access Tezos NFTs via Taco’s NFT loyalty program
The crypto-powered music platform Audius intends to become the go-to metaverse concert platform via its acquisition of SoundStage, a firm that provides virtual music experiences
Warner Bros. is releasing NFTs for its iconic 2001 film “Lord of the Rings: Fellowship of the Ring” - Web3 company Eluvio developed the NFTs and is hosting them, along with all the content data, via its Ethereum-compatible Content Fabric blockchain
💸 Exchange Highlights of the Week 💸
Customers of bankrupt crypto lender Voyager Digital Ltd. may recover about 72% of the value of their accounts under a tentative deal for the company to sell itself to FTX US
Gemini co-founder Cameron Winklevoss is no longer a director at Gemini Europe
FTX US and its founder Sam Bankman-Fried are under investigation by Texas’ securities regulator
Kraken is the latest crypto exchange to restrict accounts of Russian users on its platform in compliance with sanctions from the European Union
Coinbase will waive commission fees for USDC conversions to fiat currency in a push to promote the wider global adoption of its stablecoin
Lionel Messi partners with Bitget
👨⚖️ Government, Regulatory and Legal Highlights of the Week 👨⚖️
Avraham Eisenberg, the man behind the $114M exploit on Mango Markets, confirmed that he orchestrated the attack and claims all actions were legal after after returning $67M - crazy $47M bounty. Mango Markets is proposing to pay back users with different tokens following the $114M hack using a snapshot of balances from an hour before the attacker made his first deposit
SBF‘s view on regulation: I fundamentally believe that blocklists are the correct approach to sanctions compliance on blockchain environments; BTC and ETH are not considered securities; many long-tail tokens acting as investment contracts are securities; tokenizing stocks could help simplify securities settlement
Hong Kong promises its cryptocurrency stance is separate from mainland China’s, considers direct retail participation
FTX founder Sam Bankman-Fried agrees with CFTC Commissioner Christy Goldsmith Romero over the benefits of disclosures and knowledge tests for trading
Newly released IRS draft instructions for the 2022 tax year change the language from “virtual currency” to broader “digital assets” - this broader language aims to include NFTs
Israel’s Ministry of Finance and Tel Aviv Stock Exchange (TASE) are preparing to test out using digital state bonds
Crypto bank holding company Silvergate Capital no longer plans to launch its long-awaited stablecoin before the year’s end - related to preparing the stablecoin for regulatory compliance
Coinbase joins Grayscale in claiming that the SEC is failing to give spot market Bitcoin ETFs fair consideration
💩 Scammy Sh*t:
World famous soccer player Ronaldinho tweeted his support for the World Cup Inu token and the chart tells a very interesting story…. This has scammy pump and dump vibes all over it and considering that the SEC recently fined Kim Kardashian for such behavior, it begs the question of whether Ronaldinho will also face any legal issues from this type of endorsement
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