Gm, gm!

Happy Monday, all. It was a fairly steady weekend across the crypto markets and crypto Twitter, which might mean that we're either cooling off or heading into a wild week of volatility with the FOMC statement and conference on Tuesday.

Today we have another Ape Enclosure deep-dive as Grant recently sat down with 0xJose, the founder of the hottest project in the NFT-Fi space, nftperp.

PS. the best comment in the poll at the bottom gets a shout-out in Thursday's newsletter so let's have it. 

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Here's what's inside today.

🔥 The Big Topic. Exclusive: From NFT Collector to Perps Owner, an interview with nftperp founder 0xJose🗞 Hot Crypto News. Galaxy Digital CEO Mike Novogratz 'Cheers for Binance', UniSwap Dev wins Web3 Mario Kart style gaming event, Animoca's DareWise a hiring 'Head of Degen Relationships' AND MORE.👀 Updates Across the Bloc. AAVE's governance arena is stacked and will be deploying AAVE V3 on Ethereum very soon, Handle Fi completes integration with GMX's GLP, Gains Network his $1bn in weekly trading volume giving over $230k back to stakers AND MORE.🛡 Chart of the day. It's make or break for the $SPX.

🧵 Thread of the day. Dan chats with The R Round-Up for his own exclusive interview talking about mountains, DeFi, and travelling to conferences with Jedi blocmates.

🔥 The big topic.

From NFT collector to Perps owner

An exclusive interview with NFT Perp Founder 0xJose.

Our second deep-dive write-up, as we digest the recent interview with NFT floor sweeper, blue chip chipper, and nftperp Founder 0xJose.

This exclusive interview takes a dive into 0xJoses' start in crypto, the current issues & future of NFT-Fi, and how nftperp was born. Plus, is a free community mint coming?

For the full podcast be sure to check out YouTube | Spotify and our long-form in-depth Research Article.

Who is 0xJose?

From his beginnings as an NFT collector to now being a Perps dealer, 0xJose has had a colourful career in crypto since joining the space at a local VC fund back in 2017.

He then moved into an NFT investment DAO, sweeping floors and collecting the biggest blue chips on the market which ultimately led to the pain point that most NFT traders face.

That pain point being hedging the downside of NFTs. NFTs by nature are directionally long… sometimes so directionally long you might not make it back in one trade.

So on one sunny day, when 0xJose was checking his Jpegs, he thought: “Wouldn't it be cool to short NFTs? I could hedge against the downside while also being a collector.”

After a couple of Google searches and reading Paradigm Research Partner Dave White’s “Floor Perp” article, it gave him that light bulb moment of validation.

I want to HEDGE my downside so let’s make nftperp, a place for NFT price speculation.

So what is nftperp?

The ultimate place to have fun with your NFTs beyond flexing them on Twitter.

nftperp is an on-chain derivatives protocol that allows its community to use up to 10x leverage long and short on their favourite NFT collections including Bored Ape Yacht Club, Azukis, Milady and Punks.

Pretty cool, right?!

Keep in mind that nftperp is still in private beta testing and has already recorded some pretty staggering stats. In December alone the platform had pulled in 16,000 ETH worth of volume and already in January has sailed beyond 36,500 - that's $46m! 

Both Messari and Delphi Digital are bullish, having both written threads on nftperp.

The Issues facing NFT-Fi

NFT-Fi is the combination of NFTs and DeFi where liquidity protocols enable NFTs to be used to finance transactions.

0xJose talks a lot about liquidity and how:

1. The NFT marketplace is inefficient. From the platform fees (Open Sea vs Blur) to the royalty fees (different per collection), to the gas fees (remember the BAYC Other Side mint? $3,000 + fees!). By the time I get to change my Twitter profile picture, I’ll need at least a 10% movement to break even, assuming the floor price hasn’t just tanked.

2. Thinning liquidity. As marketplaces become inefficient the cost of liquidity becomes higher as it costs more to use, move or interact with your almost illiquid Jpegs.

3. Royalty Fees. Traders and collectors are two different beasts and while the NFT community might not like traders flipping their collections, 0xJose makes the point that traders shouldn’t be paying royalty fees due to the fact they don’t exercise the utility, given that they're just speculating on the price. Traders should be using perps as they are cheaper, more efficient, and a fun way to get exposure. All the while collectors get to enjoy the intrinsic value the NFT holds from the community, plus the Twitter flex and free hoodies as they’re "innit 4 the NFT".

Solving the issue of liquidity

So how do you solve the issue of NFT liquidity? With an on-chain derivatives platform of course!

nftperp has created a PvP arena of speculation that traders can use because lower fees equal freer movement, reducing the cost of liquidity.

Plus throwing on a 10x short on the Bored Apes is a lot of fun and a dream come true for jedi blocmates (NFA, DYOR of course!).

Heres how nftperp are looking at it

Step 1. Understand what liquidity looks like in the spot market and how it works. How do we value the actual floor price on an NFT? By using an in-house oracle that can determine the spot value based on historical sales.

Step 2. Understanding how derivative protocols work. By getting your head around this and using a vAMM book you can bootstrap the volume using synthetics so there's no need to wait for the big-boy market-makers to come in.

One area 0xJose and the team have focused their efforts is on Self Funded Insurance Funds (basically back-stops bad debt) by funnelling fees directly back into the protocol's own insurance fund which allows for high open interest, bigger leverages, and allowance. Wen staking?! Soon...

Community retention beyond incentives

What I personally really like about the nftperp concept is they have taken the NFT attitude of community building, applied a slick DeFi protocol on top of it and made the UI/UX fun.

Throughout the interview 0xJose talks a lot about how there is a big sense of belonging in NFT communities and it's one you want to show off through your socials, in-person meet-ups and actual brand apparel.

Capture the culture of the community to be part of something bigger. Not just a derivatives platform, but an ecosystem of cool people who are innit 4 the gains, the NFTs and the crew. There's very little honour in the DeFi space as once yield drops the rotation begins.

The future of NFTs

The future is bright.

And not just in terms of more cool-looking utility-based jpegs that give you a free hoodie - no no! The NFT space has bigger potential than that. One area that 0xJose highlights is unlocking the value of UniSwap v3 NFT positions.

One team he mentioned that is doing just that is Astaria, an on-chain lending protocol with instant highly liquid NFT lending. It's also co-founded by ex-Sushi CTO Joseph Delong, who raised $8m in seed funding.

Scott is the Head of NFT product at UniSwap and Astaria retweeted this back in August. Looks like UniSwap has been working on this for some time.

So what’s next for nftperp?

A LOT.

The private beta will continue as we expect to see February’s volume surpass that of January. This is while the rest of the team finishes off products like the Insurance Fund Staking system (allowing stakers to get ETH yield as an insurance provider) and rolls out a limit order protocol that they're building on top of the vAMM.

To wrap it up 0xJose has two big visions for the future.

The first is to truly unlock the liquidity that's currently sitting your illiquid NFTs to allow average used and institutional lenders to create and use better NFI-Fi strategies.

The second is geared toward the exponential growth of the platform as he believes that the true sign of traction is when nftperp has the same market volume that is comparable to the spot NFT market.

A vision we believe 0xJose and the nftperp team is quite capable of achieving.

A quote to finish: “This is only the beginning. Without the people, it’s a few lines of code. It's the people, the team, the users, the community members even the trolls that are making it what it is. Without them… there is no value, only mercenary."

PS. check out the alpha at 49:44mins as 0xJose talks about an up-and-coming free mint.

🗞 Hot crypto news.

🐮 Bullish

Novogratz Cheers for Binance. Galaxy Digitals Mike Novogratz says we should "cheer for Binance" as we wait for one major key indicator before traditional finance institutes jump back into crypto. That key indicator is retail. Mike says in an interview with Raoul Pal that "Crypto needs the retail participants" to bring the "energy back" in (and make for exit liquidity).

UniSwap Devs Wins Web3 Gaming Competition beating the likes of Ledger, Polygon, NEAR, Yield Guild Games, Chainlink, OKX, and Bybit in a game of 0xMonaco, a Mario Kart-style racing game hosted by Matchbox_Dao. GG Team UniSwap Devs!

Are you a Head of Degen Relationships material? As Animoca subsidiary Darewise, creators of Life Beyond are hiring for one of the coolest positions in Web3 right now. PS. Help our friends at Web3Nomads get the position on their website!

🐻 Bearish

Chinese ChatGPT Baidu is China's largest search engine company is looking to launch the Chinese version of Open Ai's ChatGPT in March. Depending on your stance on AI and China this could be as bullish as it is bearish!

SBF wants control of his crypto. Come on Sam... really? Sam's lawyers are arguing the case he should have access to his crypto and claim "no evidence he's responsible for previous alleged unauthorized transactions." Can he not just enjoy being off the hook living in Mum and Dad's luxury estate?

Harmonious North Korean Hackers try to launder $27m from a Harmony Bridge attack. ZachXBT is always fast to move and breaks down the hack in this Twitter thread with a shout-out to the exchanges that froze the stolen crypto fast. While the South Koreans are en route to introducing the "Virtual Currency Tracking System" in 2023.

👀 Updates across the bloc.

Project Updates

ARBITRUM, no... this isn't the airdrop - sorry! It's Episode 1 of DeFinds featuring GMX and DOPEX with Aribtrum Partnerships Guru LukeX58 on January 31st at 2pm EST.

HANDLE Fi's integration with GMX's GLP on Arbitrum is now complete. Allowing Handle Fi users to access GMX's deep liquidity while GMXers and Blueberries get access to Handle Fi's SLICK UI and charting functionality.

GAINS NETWORK hits over $1bn in weekly trading volume spurred on by their current trading competition and in turn gifting stakers over $230k in rewards.

GIGADAO, built on Solana and will allow fractionalised NFTs and margin trading on GigaDEX. They have released a sneak peek of their up-and-coming February NerdsNFT minting.

JONES DAO, strengthening the relationship with CamelotDex with a pending treasury swap, $jUSDC/$ETH & $jGLP/$USDC pools go live and $GRAIL emissions increased on Jones pools.

SMILEE, a Decentralised Volatility Product (DVP) protocol on Arbitrum has just released its lite paper. You'll be able to long volatility instead of getting rekt by impermanent loss because we all prefer impermanent gains.

SUDOSWAP. An on-chain NFT AMM protocol lets you unlock liquidity in your NFTs. Bursting Bagel breaks down how he made $22,500 in fees in just 8 days. 

SPICE FINANCE will be launching its debut NFT collection on January 30th into the world of NFT-Fi. You can find the minting details by following the link.

VEST EXCHANGE, a DEX launching on Aribtrum has come out of stealth mode backed by investment giants Jane Street, QCP Capital and more. Keep an eye on their Twitter as they are limiting the number of people allowed in the Discord. Potential testnet coming soon, too.

Governance Updates

AAVE cleared the $2.7m bad debt that was left after the Mango Markets exploiter Avi Eisenberg's manipulation last November. The community voted in favour to procure the necessary CRV tokens. 

AAVE, the ARC has spoken and has proposed to onboard rETH (Rocket Pool Eth) to AAVE V3 on the ETH market as as reserve. Plus onboarding Gamma Strategies’ GHO-USDC LP position on Uniswap v3 as collateral.

FLOKI, pass voted to burn almost $55m worth of tokens, active February 9th, and reduce the buy/sell tax to 0.3%, active February 3rd.

🛡 Chart of the day.

Make or break for the $SPX

It's make or break for the SPX as we approach the monthly close. On Friday we had an almost perfect retest of the 4100 mark closing the weekly candle right on the 50 weekly EMA. Take note of the RSI as this will be the 4th time we test it with each previous time being a failed breakout.

However, what we have now that we didn't then is the potential for a dovish FOMC meeting and better macro headwinds (at least being portrayed in the media). This could be the very catalyst that gives us a nudge up to the 4300 zone continuing the rally.

Bull case - hold above the 50-week EMA to break through 4100 en route to 4300 a continued rally into... Valentines Day?

Bear case - we just couldn't hold it together for a few more days as we head back down to test the 3900 zone before another test of the red 200-week EMA.

Coming up this week:

🧵 Thread of the day.

Dan sat down with The R RoundUp last week to talk about mountain climbing, the DeFi space and what it's really like travelling to conferences bunk bedding with Jedi.

Thanks to TheRRoundUp for the feature! They are doing some great work of their own so check them out.

And on that note, thanks for reading, catcha apes in the next edition!

grant, jedi & dan 🫡

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A final word 🤝 

A quick word from our super awesome sponsors who help us make this all possible...

Join the Web3nomads team on blocmates' spaces this week, as they're joined by the team from Factor Dao who are looking for a Senior Full-Stack Engineer. The guys will be discussing the role, the company, and the culture at Factor Dao, so you've got all the information before you send in your application. 

Senior Full-stack Engineer on Web3Nomads

The modular building blocks for on-chain asset management - an infrastructure and liquidity layer for DeFi. All existing DeFi assets aggregated under one roof, enabling the creation of novel instruments and strategies A one stop solution for protocols looking to boost TVL, treasury managers looking to hedge exposure and generate yield, or aspiring asset managers looking to build on chain track record. Factor is launching on Arbitrum in February, and is one of the fastest growing protocols on Arbitrum.

http://bit.ly/3DpPVGa

Could you end up filling the role? Keep an eye on Twitter for the Spaces this Thursday.