Cryptogram - 13JAN2023

5 DeFi projects to invest in for 2023

13 January 2023

In this issue

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

.

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Hello!

We are hoping to see a Friday when we DO NOT have to start our newsletter by mentioning SBF yet again, but clearly, we are not there yet.

So, yeah, on our Top 5 stories this week:

-1-

Keeping up with the trend of jobless people launching a Substack, SBF published a

of the FTX crash on his newly minted newsletter, and blamed Binance CEO CZ for “precipitating” an “extreme, quick, targeted crash” of Almeda. 

But no amount of finger pointing can make his legal woes go away, with another (former) member of his inner circle at FTX –

for ostensibly ratting him out. 

Meanwhile, FTX’s attorneys say they have

.

-2-

Encouraging inflation data pushed BTC past $19,000 briefly, and as we write this on Friday morning it is hovering around the higher side of $18000s. ETH peaked at around $1,430 and is holding steady in that region. More on that in the price watch below. 

However, it emerged this week that a

for 50,000 contracts of ether option with a $400 strike price and expiring in June were placed a few days ago. This did send across a lowkey shockwave in the crypto community.

-3-

. Analysts are looking at this as a good sign, that the company is attempting financial discipline.

-4-

The Polygon juggernaut is rolling ahead at top speed with

to help music artists step into Web3.

Meanwhile, the Polygon community has agreed to a

aiming at stabilizing gas fee spikes known to happen during heightened activity, and improving user experience by addressing reorgs.

-5-

Avalanche has two new hot partners:

across its enterprise; and

. 

 WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

 3.47% due to encouraging inflation data. We expect a positive rally for next week as it seems highly unlikely that interest rates may rise much further

ETH Watch

 6.38% as crypto traders are already placing bets on the newly announced Shangai upgrade. With governance tokens such as LDO, Frax and RPL seeing a rally, we expect ETH to move in tandem with them.

ADA

:

 16.52%. Although this could be factored as an increase due to positive market sentiments, there were also some talks on impending launch of new stablecoins, which could be the reason behind the rally.

SOL

:

 17.06%, riding on the success of their meme coin. However, experts are anticipating a short-term correction in the coming days.

MATIC

: 

 8.18% as Polygon developers seek January hard fork slated for Jan 17 upgrade to address gas fee spikes.

 WHAT'S HOT

Coins to watch out for

Hifi Finance (HIFI):

Hifi is a fixed-rate, fixed-term lending protocol built on the Ethereum blockchain. Formerly known as Mainframe, they provide lending and borrowing against crypto, borrowers get instant liquidity, and lenders get predictable returns so each can multiply their investment

Flare (FLR):

Flare is a Layer-1 blockchain with an oracle system aiming to boost interoperability among decentralized applications (DApps) and blockchains. While the token only recently launched, the protocol launched its mainnet on July 11. To date, the Flare mainnet has already processed over 70 million transactions with over 500,000 unique wallets.

Project to watch out for

Dash 2 Trade: Dash 2 Trade (D2E) is a crypto analytics platform built by traders, for traders. Dash 2 Trade provides trading signals, social analytics on-chain data to maximise investor The exciting new crypto project has raised more than $15 million during its highly successful pre-sale. The project is set to launch their dashboard soon where users will need to pay a subscription fee in D2T, the platform’s native cryptocurrency, in order to access the dashboard’s full suite of features. 

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 THE HOT TAKE

Five hot DeFi projects you can invest in

Customary disclaimer: this is not financial advice, if you choose to invest in these projects then you do it at your own risk. And always, always, DYOR. We are only pointing you in certain directions. With that out of the way… we just have to say: 

Thanks to the bear market, many DeFi projects are silently building products that will eventually see wide adoption in the upcoming years. But as always, investors ask: how to pick the right ones that are already showing promise? Our research desk has done due-diligence to identify early favourites for 2023. Buckle up. 

1. Liquity

Tokens:

LQTY, LUSD

Use case:

Users can borrow the stablecoin LUSD interest-free against their Ethereum (ETH) holdings as collateral. They can thus obtain an ETH-backed loan without any recurring costs.

A ‘trove’ is where you take out and maintain your loan. Each trove is linked to an Ethereum address and each address can have just one Trove. From a low of 479 troves in June 2022, Liquity ended the year with 922 troves equal to $179 million worth LUSD.

Source: Twitter

Why Liquity:

Instead of charging interests from borrowers, they have kept one-off borrowing fee that stands at 0.5% (can range from 0% (Recovery Mode) to 5%) under normal operations and a Liquidation Reserve equal to 200 LUSD. Given their rise in terms of adoption as well as TVL, Liquity is likely to become a popular lending platform.

Unlike Maker, where it is governed by MakerDAO community, Liquity is 100% algorithmically governed without any human involvement.

2. Lido Protocol

Token:

LDO

Use case:

Using Lido, users can stake their tokens and receive liquid tokens pegged 1:1 to the initial stake. Lido is fast becoming the de-facto staking solution for Ethereum (ETH).

Why Lido:

The protocol earns 10% of the total Ethereum (ETH) staking rewards generated from user deposits, which implies that they earn 10% of the 15M ETH currently staked at APR of 5%.

Daily active users and LDO token holders are increasing.

Lido’s fee-based revenue moves in parallel with ETH Proof-of-stake (PoS) earnings.

The steady uptick in DAUs, revenue and new Shanghai update (expected this year) of Ethereum which will let participants un-stake are all key components for assessing growth and sustainability within this DeFi platform.

Lido’s performance:

3. Rocket Pool

Token:

RPL

Use case:

Rocket Pool is an Ethereum 2.0 staking pool that allows a user to run a validator on Ethereum PoS (while Lido is a platform that lets you stake ETH).     

Every time a user stakes 16 or 32 ETH, they receive rETH token in return. Stakers can use rETH to perform any activities across DeFi. protocols.

Why RPL:

Only 14% of ETH is staked, which is very low compared to 72% of ADA, 71% of Solana or 97% of BNB. So, there is a lot of room for Liquid Staking protocols like Rocket Pool to grow once more ETH gets staked in the network.

Source: Messari

Ethereum developers are targeting March 2023 for the activation of Shanghai and staked ETH withdrawals. This is expected to drive the rally for all the liquid staking providers.

According to Defiwars, rETH currently holds the maximum (101.03%) as peg of ratio, which implies how much ETH you could get, if you traded your rETH token.

4. GMX

Tokens:

GMX, GLP

Use case:

GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades. GLP is its liquidity provider token while GMX is its governance token (https://zerion.io/blog/what-is-gmx/).

Why GMX:

The fees that GMX accrues are split 30% to GMX token holders and 70% to GLP holders. The current homepage for GMX estimates an annual percentage yield of 10% for GMX tokens and 20% for GLP tokens.

With more users flocking to DEXs after the FTX collapse, GMX has already seen sharp surges in the past few weeks.

Permissionless accessibility and leveraged trading offering bundled with rapid growth over a few months could attract institutional market as more big players start to experiment with DeFi.

Launch of Synthetics – a digital representation of derivatives – will likely boost the ecosystem as well.

GMX – Total Value Locked (TVL):

Source: Defillama

5. Yearn Finance

Token:

YFI

Use case:

Yearn.finance is an aggregator service for decentralized finance (DeFi) investors, using automation to allow them to maximize profits from yield farming.

Why Yearn.Finance:

Recent launch of Permissionless Vault Factory - any user can build a vault, accrue yield with the help and assistance of separate investment methods. (Yearn Vault is a smart contract that collects investor’s liquidity, but from other platforms)

This could lead to increase in Yearn’s stock of veCRV tokens. Released on 9th Jan 2023, they already have 24 vaults with APY ranging from 0.34% - 161.49%. 

Their low token supply of 36,666 makes it more attractive.

YFI is trading near $6,100 – nearly 93% down from its all-time high in 2021. We believe that YFI’s bearish trend may continue further into 2023 – waiting for the right time to enter is crucial as an investor.

That’s it for this issue, see you next Friday.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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