Fungible Thoughts #2
Fraxchain? Perpetuals competition continues? 9 new aplha list projects? Alfa straight to your veins.
Henlo Fungis, welcome to the second edition of Fungible Thoughts. If you missed the first edition, you can find it here:
Update:
We’ve added a neat little table of contents to help you navigate amongst the alpha. We know those mushroom forests can get a bit tricky!
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Dive into what you’re interested in!
Table of Contents
Spotlight
Alpha List
Weekly Highlights
Frax is trolling
Univ4?
Tenet’s Stablecoin
The MAV Token
EigenLayer
Disclaimer:
We don’t guarantee the projects we mention in our alpha lists will succeed. There’s always the risk of the projects failing. We strongly advise you to add an additional layer of research on top of the one we’ve provided.
Did you know that we deliver all alfa BEFORE it is posted on Twitter?
On this weeks spotlight:
Liquidity management, LSDs, Gaming, ve(3,3) DEXs and more!
Fluo
Sector: DeFi
Narratives: Omnichain/Liquidity management/Vaults
Aiming to become a liquidity haven, Fluo is set to connect DeFi users looking for fat yields with perp DEXs looking for liquidity. Providing liquidity to perp DEXs seems to be the shortcut to making attractive passive income, as we’ve seen in the likes of GMX’s GLP or Gains’ gDAI.
Basically, Fluo Chads realized perp volume on DEXs is far behind that of CEXs. So, they decided to step in and enable users to become market makers. But not only that — you can also earn juicy yield, all with minimal input. How?
Well, Fluo will provide simple, automated vaults bolstering perp DEX liquidity and negating the need for market makers, therefore, maximizing returns users are entitled to.
Omnichain deposits
(i.e., depositing USDC on one chain into a vault that operates on another chain) combined with automated strategies will remove the UX barriers. So, no switching between chains, and no hassle managing strategies — Fluo’s contracts will do most of the work. On top of that, Fluo utilizes bribes, so there’ll be another layer of rewards we’ll milk.
Why do we like Fluo? Because everyone wins!
It helps DEXs attract more liquidity and traders. Ssers enjoy a better trading experience (better liquidity = less spread). LPers earn juicier rewards and incentives. And in the end, the protocol won’t need market makers since they’ll be able to directly incentivize LPs.
How to Fluo? First, we’ll have to wait as there’s no fixed launch date yet. But don’t worry, there are ways to make money as:
- Fluo will kickstart a 14-day lockdrop event where users will reap future rewards by providing liquidity into one of 5 launch vaults
- 3% of the token supply is allocated towards airdrops — provide liquidity on Demex or another popular DEX (not defined yet which one)
- There’s a Fluo Zealy campaign where users can win a share of the prize pool by completing tasks
There’s so much more to Fluo, and we’d suggest you put the detective hat on and do some additional research. Or, simply use a Twitter shortcut and check this nice thread we’ve found:
Pound Swap
Sector: DeFi
Narratives: ve(3,3) DEX/Liquidity Book/zk
Well, well, well… here we have a project triple-dipped in bullish narratives. First of all, it utilizes Trader Joe’s Liquidity Book AMM. Then, there’s zkSync hype (already $160M in TVL and growing). And on top of that, ve(3,3) or translated to “awwwww yiisssss gib bribes”.
Technically, Pound Swap is the:
- 1st Liquidity Book fork
- 1st Liquidity Book with ve(3,3) tokenomics
Just like all the other prominent Solidly forks we got to have our hands-on, Pound Swap will kickstart the launch with an NFT. This NFT comes packed with LB and veLB tokens.
As we already know, native tokens are here to incentivize LPers, and the veToken is here to accrue bribes. More details on the IVO (Initial veToken Offering) can be found here.
How to Pound Swap?
In most cases, minting the NFT has proven itself to be the right move (not financial advice, btw). But, if you lean towards the safe side, then deploying capital into one of the first liquidity pools would be the go-to method, as initial LPs usually print token emissions. You can decrease the safety level and speculate on the longevity of the project by locking up some of those emissions to earn bribes.
1% of the LB supply will be distributed to:
- zkSync OGs (must have more than 100 transactions on zkSync)
- Liquidity Book OGs (Trader Joe deep user, Jimbo, White Lotus user)
- Pound Swap initial users
If you’ve recognized yourself, we hope your airdrop will be juicy.
However, bear in mind information about Pound Swap is still somewhat vague, and there are no mentions of audits. Ape responsibly.
DEADROP
Sector: Gaming
Narratives: duh, it’s Dr. Disrespect’s shooter
Look, we’re usually not bullish on blockchain-based games (at least not in the current state of the blockchain gaming industry), but this one is being developed by Dr. Disrescpect’s gaming studio. If you don’t know who Dr. Disrespect is, then you probably haven’t played Call of Duty. Or any other good FPS. Issa ok, you can find his YouTube profile here.
Back to DEADROP, it’s going to be a “vertical extraction” (?) FPS set somewhere in 2020.b (probably some kind of parallel dimension). Anyway, the game reminds us of good shooters such as Halo, the Unreal Tournament franchise, and a few more. Right now, it’s still being worked on, with regular updates being pushed out.
If you’d like to test the game, you’ll have to wait as Tower Keys granting pre-alpha access have been sold out. However, you can have some more insight into the game’s development by purchasing the Midnight Society Founder’s Access Pass.
Built on the Unreal Engine 5 and beautified with Ray Tracing algorithms, DEADROP could indeed become the first AAA blockchain-based FPS. That is — if you have what it takes to run the game. We say this because minimum system requirements are more suited to gaming maxis. Anyway, the hype is here, we’ll keep our eyes peeled.
How to DEADROP?
Same as we’ll do, wait for the game to launch and meanwhile work hard on making money so we can buy a PC that can actually run the game.
Mori
Sector: DeFi
Narratives: stablecoins/LSDs/derivatives
We’ve seen quite a number of teams building on top of LSDs, or more specifically, using them as collateral for their stablecoins. Mori is somewhat different as it’s (surprisingly) not a Liquity fork.
With Mori, users will be able to deposit ETH or one of its LSDs and mint ETHS or ETHC.
What’s the difference between ETHS and ETHC?
ETHS is a low-volatility asset, and ETHC a high-volatility asset. While ETHS’ main goal is to offer a stable solution (1 ETHS = 1 ETH), ETHC is a leveraged long ETH perpetual token (current leverage: 1.9x). ETHC bears small risk of liquidations (you can always add more ETH to your position and mitigate the liquidation pressure). Mori is live on testnet and there’s no token yet. There’s one in plans and all we know is the supply - 1M tokens.
Just like every proper DeFi platform, Mori too will come with a revenue-generating model, mainly coming from platform fees. The roadmap indicates it’s in the team’s plans to go for an audit (after the Mori IDO, tho). Other parts of the roadmap we like include:
- a Curve LP which will be based on ETHS and a stablecoin
- support for other LSD assets
- cross-chain deployments
How to Mori?
Use its testnet version, wait for the token IDO and if launch parameters are good (small valuation, no immediate sell pressure from private sale participants, token can be utilized/staked right away) consider aping.
This very second edition of our newsletter has been sponsored/brought to you by the Chads over at Pendle, thank you!
Remember to use the Table of Contents to skip to the niches you enjoy!
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Zephyr Protocol
Sector: DeFi
Narrative: PoW/stablecoins/privacy
Zephyr is an interesting stablecoin protocol as it combines Monero’s privacy and a 3-token model. The 3-token model consists of:
ZEPH (base token)
zephUSD (algo-stablecoin)
zephRSV (reserve coin).
ZEPH can be mined and is used to over-collateralize zephUSD (factor of 400%), and it comes with a capped supply. The downside to ZEPH is its “lack of availability,” as it can only be purchased on Seven Seas. But, we guess this is where the “privacy” part plays a role too. The protocol is currently in a private testnet stage.
Zephyr may be a bit mind-boggling, but it’s something we need - a decentralized, privacy-oriented stablecoin. Plus, we really like the fact Zephyr’s assets inherit Monero’s privacy features.
How to play? If you have a good risk appetite, buy ZEPH off Seven Seas. Then, wait for the protocol launch and act in accordance with its success. Moon or dust, as some fellow degens would say.
Galador
Sector: DeFi
Narrative: DEX
It’s no secret we’re hyped for the launch of Mantle’s mainnet. So, it’s a logical move to position into early projects (this is why Reax was in the previous newsletter’s Spotlight). In that light, we’re keeping an eye on Galador, and not just because it has a cool name. Galador is a DEX, but we’re pretty sure there’ll be more to the name than that.
For now, it’s still in development, but regardless of that, Galador launched an incentivized testnet campaign. All you have to do is join Galador’s Zealy profile, finish the quests on testnet, and wait until Mantle mainnet. Upon the mainnet launch, Galador is live.
OMX
Sector: DeFi
Narrative: perp DEX
Although OmxLab is simply a GMX fork, it found itself on our list mainly because of Osmosis, the leading DEX of the Cosmos ecosystem. We’re impressed with some of the recent updates and announcements from the Osmosis Lab:
- OSMO emissions are cut by 50%
- Concentrated liquidity pools are coming
- Fee switch/fee sharing mechanism will most likely take place
That’s quite bullish for the once-hyped DEX, and we expect these upgrades to positively reflect on the price of OSMO. And since OmxLab will offer OSMO trading with leverage, it should benefit as well. On a side note, the Cosmos ecosystem still enjoys solid usage levels and didn’t die like some chains (no, we won’t name them).
Hover
Sector: DeFi
Narrative: lending
Looking to find a home on the Kava EVM, Hover is set to bring lending with a few extra features. The team just published their litepaper, and it looks really nice.
TL;DR:
- 3-token model (HOV, esHOV and xHOV)
- Pyth price feeds to secure lending markets are safu
- Will likely receive a Kava grant (that’s our guess since Kava is one of Hover’s partners, apparently)
- Real yield props (we never say “no” to that)
- Liquidity incentives (we expect to make a program rewarding users)
Hover will kickstart in the following order: genesis pools, public sale, full protocol launch (end of summer 2023). Hover will be audited by WatchPug and monitored by Ledger Works (24/7 market surveillance).
What do we suggest? Keeping an eye on Hover, participating in Genesis pools, and if conditions are good, aping the public sale. Hover could potentially become the #1 lending platform on the Kava EVM. We’ll see.
StakeStone
Sector: DeFi
Narratives: DeFi/LSDFi
Praxis has shown not to fade narratives, especially if those are quite explosive like LSDFi. Yes, this means we probably won’t fade StakeStone. Is this financial advice? Absolutely not.
Anyway, here’s the deal: users deposit ETH to mint STONE, which is a basket of ETH liquid staking derivatives. Once users have acquired STONE, they’ll be able to use the asset in StakeStone’s eco in order to juice out some more yields. This is something we’ve already seen a good number of times, but will always be happy to get more of.
Speaking of the STONE eco, here’s what we can potentially expect:
- A stablecoin
- Lending
- DEX
- Derivatives market
$STONE is set to go live in early July, and the best way to get prepared is probably by using the platform once it’s live. There’s no mention of incentive programs, airdrops, or worms for early birds, but we’ll give it a try anyway. Note: there’s no audit yet. Ape responsibly.
PairEx
Sector: DeFI
Narrative: perp DEX
For some reason, the perp DEX space on Arbitrum is still the hottest segment as there are always more being deployed — but we’re not complaining. PairEx is, obviously, a perp DEX on Arbitrum. While enabling us to max degen BTC, ETH and 3 forex pair trades with max leverage, it also enables us to make profits off their PLP vault.
There’s no description of what the PLP token is, but we’ll assume it’s similar to GMX’s GLP. So, with PairEX, users can either go full-Rambo leverage trading, or take the safu route and deposit USDT in the PLP Vault and earn yield based on traders’ PnL.
According to their Dune dashboard, PairEx already flipped 3 million USD in volume. There’s also a referral program, as well as an NFT (free mint) which grants users 50 fee-less transactions, and also fee-less trading (if trading volume is >$1M).
There’s no token yet, and this is what we recommend: wait for the token launch and try to make money flipping. Or holding, if you can.
Augusta
Sector: DeFi
Narrative: $VELO Wars?
No, we’re not kidding, it seems Augusta is pivoting an emerging narrative: Velodrome Wars. It’s actually not a bad idea knowing Velodrome’s TVL is $200M+, as well as the fact that Velodrome v2 is basically around the corner.
Also, bribe APR on Velodrome is currently averaging 45%, so there’s quite enough room to create DeFi legos on top of the liquidity giant. Regarding Augusta, there’s not much info on their Twitter, but we do expect it to go live once Velodrome v2 is live.
The playbook, however, remains the same as for other XYZ Wars platforms:
Lock the token (in this case VELO), mint the wrapper (auguVELO), stake that (auguVELO), and in the meantime, get some protocol-native tokens (in this case, AUGU), to boost your VELO rewards.
What do we suggest? Wait for Velodrome v2 and Augusta to go live on Optimism Mainnet. Play according to your risk appetite. There’s no audit to Augusta, so don’t let that slip from your memory.
Nuk’em Loans
Sector: DeFi
Narrative: memecoins/lending/nostalgy
It’s simple: you lend out memecoins, you borrow stablecoins against them, and then you buy more memecoins. The proposition of lending memecoins and borrowing against them is something the space needed all this time (when liquidity is taken into consideration), but no team managed to pull off. The idea gets even better as there are also real-yield mechanisms within Nuk’em Loans.
Another thing we like about Nuk’em Loans is, it will consist of isolated lending pools. So, in case one pool is exploited, the other ones remain intact. One of their Medium articles states there’s been over $2M invested for the sake of developing the platform. We hope that’s not a meme. Anyway, Nuk’em Loans should go live in the coming days, and so should it’s token. Speaking of the token (named NUKEM), here are details:
- 100% of the supply will be in circulation right upon TGE
- Inflation via bonds (so, not so fast)
- No tax
- No VCs
- There was a community sale during which $150k has been raised (+$200k team funds)
Looking forward to this one. How to play? Probably buy the first dip. Probably.
Pike
Sector: DeFi
Narrative: cross-chain lending
Launching on the Base L2, but unifying liquidity on Ethereum, Arbitrum and Optimism as well, Pike is here to actually offer cross-chain lending. In order to do so, Pike Chads will utilize Wormhole and CCTP by Circle. To prove Pike is a serious player, we’ll add that it’s audited by OtterSec, a well-known name in the auditing space.
How does Pike work? It will use Base as the focal point (central chain), users will underlyingly use Wormhole to create lending/borrowing positions (i.e., deposit ETH on Arbitrum and borrow USDC on Optimism), and Circle’s CCTP will serve as a medium to repay loans (repay the loan using USDC on a third chain).
There’s no mention of a PIKE token (yet), but maybe there will be an opportunity for early adopters as Pike announced a testnet campaign starting sometime in July. Oh yeah, Pike will also support yield-bearing assets.
For more info, we recommend reading their Mirror articles you can find here and here (hands down 2 great articles). We’re bullish on Pike and cross-chain lending. If you’re up for it, sign up to become one of the first testnet participants.
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The most important updates about projects within DeFi from our weekly recaps. Remember, all alfa will be posted first on substack, then on Twitter.
Fraxchain?
We’re used to seeing Frax ship quality product after quality product, but the announcement of their Fraxchain L2 upped the bar, even for them. It makes total sense as well, with Frax basically being its own ecosystem with swaps, lending, billion-dollar stablecoins, LSDs, bridging, and more – all revolving around its FXS token. Fraxchain will give all of these projects their own home in which to operate and expand, which will also use decentralized sequencers that have revolving ownership. What’s not to love??
And in case you missed it, Frax just partnered with Resonate Finance (product of Revest Finance) to incentivize liquidity on frxETH. Resonate allows users to lock up LP tokens for a certain amount of time and receive an upfront yield payment. That means liquidity is stickier, making frxETH markets deeper and more reliable.
What makes this especially nice is that most frxETH is illiquid since it’s oftentimes locked for sfrxETH, so this incentivizes an alternative way to earn on frxETH. This is a win-win for both projects: Frax gets better liquidity on their frxETH, and Resonate onboards a DeFi titan by providing liquidity for Frax’s product.
UniV4
This was another big update for one of DeFi’s biggest players – what a week!
While UniV3 revolutionized the DEX space with concentrated liquidity, V4 looks like a major improvement. The main feature of V4 is hooks, which allow devs on other AMMs to build on top of Uniswap’s pools and customize them in seemingly infinite ways.
Some use cases that Uniswap came up with are dynamic fees (based on liquidity, volatility, etc. – btw Tigris Trade is doing this), limit orders, earning on out-of-range liquidity via lending protocols, customized oracles, and more.
However, knowing that DeFi is full of absolute gigabrains, there will probably be all sorts of use cases we can’t even fathom yet. Uniswap has obviously been one of the trailblazers of DEX functionality, and we’re excited to see how V4 once again improves the overall market.
Tenet’s LSDC
Tenet also introduced their native stablecoin LSDC, or Liquid Staking Dollar Coin. We’ve been hot on the trail of Tenet for a bit now, and this project continues to impress! If you’re unfamiliar, Tenet is a new L1 that’s completely centered around LSDs.
The protocol itself is secured by liquid staked assets from various chains such as Ethereum, Polygon, Solana, and BNB chain, which are bridged to Tenet and wrapped into LayerZero OFT’s. Once those assets are staked to Tenet’s validators, stakers can mint new LSDC tokens backed by said assets.
What makes this even better is that 10% of the fees made by Tenet for managing LSDC’s collateral is passed through to veTENET holders.
LSDC’s public beta testnet went live on June 16th, and we’d encourage anyone interested to go try it out – more info on how to do so can be found here:
MAV Token
LSDC wasn’t the only bullish token news we got last week, there was also the announcement of MAV token, which will be the native token for Maverick Protocol. This token should attract some serious attention, especially after Binance added it to their launchpool just a day after it was announced.
When it comes to utility, MAV will have 3 primary functions:
· Stake MAV for veMAV– the longer you stake, the more veMAV you get
· Voting/governance
· Boosted rewards
We’ve been bullish on Maverick for many months, as they’ve created one of the most capital-efficient DEXs in all of DeFi. In fact, they’ve generated $2 billion in volume in less than 100 days of operation (including 30% of all of DeFi’s wstETH volume!).
Basically, the way liquidity is managed on Maverick is very useful for pegged assets like LSDs and stablecoins. That means LSD LPs on Maverick have a very bright future, and the MAV token opens up the door for even more money to flow in. In the not-too-distant future, it wouldn’t be surprising to see veMAV wars unfold as large LSD projects want to keep incentivizing holders to keep their tokens pegged using Maverick.
EigenLayer
Last but not least, EigenLayer celebrated a successful Mainnet launch last week of their Stage 1 platform. This is one of the biggest infrastructure upgrades in recent history, as it allows ETH stakers to re-stake their ETH and earn even more yield on it while providing security. Currently, you can create an EigenPod on their app and restake rETH, stETH, and cbETH.
Mantle, an L2 chain currently being built on Ethereum, is integrating EigenLayer directly as well, which means restaking will be available when the blockchain goes live. And even though it isn’t live yet, there are already some interesting projects being built on top of it.
We’re also 2-for-2 now in mentioning Mantle projects in our newsletter (bullish!) You already saw our mention of Galador above, but we also covered one in our prior Alpha List called Reax Finance, which aims to be the hub for all sorts of synthetic assets on Mantle. More in the thread below:
Parting Wisdom
Never realize losses, and you’ll only ever win’’
If you made it this far, congratulations! Also, thank you so much. We’re new to the newsletter game but will be improving upon every iteration.
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Fungi out -