🦍 Top 3 UNRELEASED DeFi Projects of 2023…
Airdrops Confirmed, Take 2, Grant Messed up the newsletter...
Top 3 UNRELEASED DeFi Projects of 2023…
Gm fellow apes,
First of all, apologies for screwing up the first newsletter! Dan is away and has left Grant and Alex in charge and we messed it up on the second go… Dan, hurry back please…
After last week’s meme season stealing the show we thought we would take you back to some fundamentally sound projects that you may or may not have heard of. None of these projects or their tokens are available so don’t go blindly aping into something you see online.
These, in our opinion, are the most promising projects yet to come onto the market in 2023. Some have an airdrop confirmed if that is your kind of thing, some however, you are going to have to buy them like a regular human.
Also, don’t believe those airdrop thread boys that just make up false information to farm engagement. They literally don’t know what they are talking about and are charlatans.
Again, this is just our opinion, we are but mere apes and know nothing. None of this should be taken as financial, legal, dietary, sexual or medical advice. Consult a life coach for these matters.
Project Number 1 -
What is it? Tapioca is an omnichain money market. Users will be able to lend and borrow some of the most important assets in DeFi including ETH, stETH, BNB, MATIC, AVAX and even GLP…
The real key innovation here is that users can deposit any of the above assets on any network and then borrow against them wherever they like…
For example: Let’s say I am a long-term BNB bull… I have no desire to sell my BNB, why would I do that? The problem… all your friends are having fun with a shiny new shitcoin that is gaining some serious traction on Arbitrum… FOMO is beginning to take hold...
You can take your BNB to deposit it into Tapioca and then borrow the native Tapioca stablecoin (USD0) against your BNB. Better yet, you can choose to mint the USD0 on Arbitrum in 1 transaction.
So now, you have kept your $1,000 BNB position open (deposited into Tapioca), you have borrowed say 10% ($100) against it in USD0, you have minted the stablecoin on Arbitrum for you to now get involved with your ape gang buying whatever shiny new ponzi comes on to the market.
The reason you are able to seamlessly lend and borrow against your favourite assets is that Tapioca is built using LayerZero. This is a messaging protocol allowing cross-chain communication between assets, smart contracts and protocols.
Airdrop? twMatt the founder of Tapioca has stated many times there will be a TAP airdrop… but there is a catch.
Tapioca is all about giving value to get value. A previous mirror article brilliantly titled RIP Liquidity Mining - highlighted how, in recent times, projects have wastefully given away their tokens to mercenary farmers who will always proceed to dump their mining rewards.
Taking this another step further Tapioca has introduced the first real use case for oTokens.
oTokens (oTAP) are options tokens which let you purchase the TAP token at a discount compared to what it is openly trading for on the market.
This way users who deposit into the protocol will receive oTAP tokens depending on how much and how long they deposit their assets.
If Bob comes along and deposits $10,000 worth of ETH and locks it for 1 year, then he may receive an oTAP discount of 30%.
If we say TAP is trading at $2 on the open market, this would give Bob the right to purchase TAP for $1.40 (30% less than the current trading price).
If Alice comes along and locks $20,000 ETH for 2 years then she may receive a 50% discount. This is because the amount and duration have exceeded Bob’s deposit therefore she receives a better oTAP option.
So, what does this have to do with the airdrop? Well, as I mentioned to get value, you have to give value.
Tapioca won’t airdrop TAP tokens… they will instead airdrop oTAP granting their active contributors the right to purchase TAP at a discount from the DAO.
Any funds used to purchase TAP through oTAP redemptions will be used to add to protocol-owned liquidity such as USD0-USDC LP and/or TAP-ETH Liquidity on Uniswap.
For a full explainer of the Tapioca protocol from start to finish you can read our full 35-page report on this innovative and groundbreaking project: The Definitive Guide to Tapioca.
Why we are bullish…
LayerZero is (in our opinion) the future.
Innovative money markets are only the beginning for Tapioca…
The fastest-growing community in DeFi
Bentobox v2 business license creates a no-fork moat
A truly innovative and forward-thinking team
USD0 is a fully backed collateralised debt position (CDP) stablecoin which won’t rely on TAP incentives to maintain the peg. It will use Arrakis to market make… Thus, no wasted TAP emissions getting dumped.
TAP locking to align long-term value investors.
No traditional VC money, all DeFi-native investors.
Pearl Club NFTs
Project Number 2 -
Name: Infinity Pools
You thought win-win situations are impossible in #Crypto?
Well, let me tell you that there is a perpetual futures instrument where traders have much higher expected returns, and where the house does not have to worry about liquidation risk
Enter @InfPools 🧵 👇
— ipor_intern (@ipor_intern)
Feb 28, 2023
What is it?: Up to 10,000x leverage, no liquidations and trade on ANY token? Sounds like a scam doesn’t it?
Well, it isn’t a scam but the wording of it certainly grabs your attention. When you dig a little deeper it begins to make sense.
Up to 10,000x leverage - Why would anyone need this? Well, interestingly enough those looking to speculate on low delta pairs such as FOREX, stablecoin pairs, interest rate swaps etc. could look for 100-1,000x (or more) leverage.
Now, just because I state a ridiculously high leverage amount doesn’t mean it would be useful but it is possible.
The magic under the hood utilises concentrated liquidity from Uniswap v3 to allow users to gain leveraged exposure to any asset with liquidity.
Users must provide the capital upfront to leverage similar to a margin position and will face losing their capital commitment if the trade goes against them. This is not technically a liquidation as assets aren’t needed to be rebought or sold to pay down the bad debt. This is more of an automatic repayment to LPs from the traders as soon as the position is out–of-the-money.
If you want to hear Matthieu from Infinity Pools explain the full break down you can head to our recent interview with him below:
Airdrop? No signs of an airdrop just yet. That being said a little birdy told us that the testnet should go live at the end of Q2 so we would recommend entering their Discord and see how you can get access.
Why we are bullish…
We are overall bullish on innovative products.
The team have previous successful products such as Lemma Finance.
Projects building on top of concentrated liquidity will reign supreme
Current leverage protocols are constrained by the depth of liquidity, infinity pools use existing Uni v3 liquidity making it more capital efficient
10,000x leverage sounds cool, apes gonna ape.
It unlocks the door for so many use cases such as interest rate swaps and even FOREX markets.
It will either be a game changer or back to the drawing board. All or nothing. 10,000x leverage.
Project Number 3 -
What is it?: There is a real issue in DeFi with those who provide liquidity to decentralized exchanges (AMMs) and not being profitable…
But, what about all those fees?!
Well, yes LP fees can be quite lucrative. Each time there is a trade between two assets there is a trading fee taken and distributed between all of those in that pool proportional to their % share of, said pool.
The problem is crypto is very volatile (no shit, Sherlock). A lot of the time it would be been more beneficial for the LPer to just hold the better-performing underlying asset in the pair, naked and capture the upwards price movement.
For example in an ETH-USDC LP if you bought ETH at $2,000 and provided 1 ETH and say $2,000 USDC as liquidity this would be a total of $4,000:
1 x ETH at $2,000 = $2,000
2000 x USDC at $1 = $2,000
Total LP size $4,000
Total Ratio 50:50.
If ETH rips to $3,000 then you would have been better off just holding the full amount of capital ($4,000 or 2ETH) in ETH and capturing a 50% move netting $2,000 in profit.
You would have been better breaking up the LP into USDC ($2,000) and ETH ($2,000) and letting the ETH position move up 50% and being up $1,000 or 50% on your ETH holding.
This is, in a nutshell, impermanent loss (IL)… So, if there is no real incentive for people to provide liquidity how are people going to trade?
Do we just accept the fact that LPs should not be rewarded properly for their endeavours?
Well, up until now we kinda have and it is extremely unsustainable.
This is where GammaSwap comes in…
With GammaSwap those providing liquidity can hedge their expected impermanent loss.
Well, LPs want high volume (lots of trading fees) with low volatility (prices between their two assets to not deviate too far from one another).
The easiest way to think of this is stablecoins…
As a USDT-USDC LP, you’d ideally like them to remain as close to $1 as possible and lots of trading between them…
The issue is a lot of tokens are very volatile as we well know… USDC even depegged quite recently over the weekend to $0.85!
If GammaSwap was available over that infamous weekend that USDC took a beating then liquidity providers could have hedged (longed) volatility and earning some very tasty APRs in the meantime.
LPs of the USDT-USDC positions could have also earning some very juicy fees from people borrowing their LP position too.
Going back to our ETH-USDC example above, using GammaSwap if you were expecting a time of volatility and wanted to hedge this you could use GammaSwap to effectively borrow more LP tokens, break them up into the underlying ETH and USDC assets and capture the price movement to the upside or downside.
This way despite your LP position eating a lot of IL, you made money by holding either ETH or USDC over a short period, thus off-setting the IL. Pretty smart indeed.
So, in short, GammaSwap is a DEX that allows LPs to earn additional yield. The yield comes from those wishing to bet on volatility between the assets in the underlying LP. If traders expect volatility in your LP position, they can borrow your LP on GammaSwap and pay you a fee for doing so.
Alternatively, you can borrow against your LP position and hedge your own IL…
If that is going over your head you can do one of three things:
Watch our interview with Devin from GammaSwap -
Read this Thread -
How is GammaSwap innovating upon the current AMM model and as an LP how can I profit off IL? 🧠
A 🧵on impermanent gainzzz 💪👇
— GammaSwap (@GammaSwapLabs)
Oct 31, 2022
Use the product when it comes out for a better understanding -
Airdrop? Well, there have been rumours about an incentivised testnet…
WAT MEAN? Who knows…
If you were one of the 20k Testers who participated in our Alpha Testnet, you can mint a @Galxe OAT below 👇
Minting Is FREE - the gas is subsidized by @GammaSwapLabs 😉
— GammaSwap (@GammaSwapLabs)
Apr 5, 2023
Why we’re bullish
Again, we’re bullish on 0-1 innovation
This will not be the final GammaSwap product
A large portion of the GMX team are investors in GammaSwap…
The GS token is going to take inspiration from GMX but with additional benefits and innovations…
That is about it, I apologise if this is a sloppy excuse for a newsletter, Dan is back on Thursday so we will get back to covering a wider variety of alpha and topics…
Alternatively, we will pivot to a sourdough recipe newsletter…