Hey everyone I’m back! I knew that I was going to have to take some time off because of some normi-work responsibilities I had to take care of, but I was originally only planning on taking one month off — unfortunately one month easily turned into three.
My hiatus from posting didn’t mean that I wasn’t keeping up with major Crypto news — I simply didn’t have enough to write and do the deep dives that I’m accustomed to. That all being said, I want to get into some of the major observations that I’ve made over the past few months.
DeFi is Still F*ing Early
How do I know that we’re still early? Because DeFi is still the Wild West. Yes, there are lots of opportunity to be made, but with those opportunities comes a lot of risk. As I was compiling information, I stumbled upon yet another report about an exploit, this time on of Zunami Protocol for more than $2 million dollars, a stablecoin yielding platform that I’ve written about several times before. The fact that exploits like this can happen so frequently (others I can name off the top of my head include, Curve, 0vix, and Euler) are evidence that there’s still a lot that the industry has to figure out. In some instances funds have been recovered (or at least partially), but regardless, I imagine that these types of risks are what’s keeping a lot of people (and institutions) out of the cryptomarket.
Unfortunately given the state of U.S. Politics and the frustrating lack of clarity of any significant regulation that will actually protect investors, I imagine that DeFi will continue to be modern-day Wild West where grifters and scammers will continue to prey on any opportunity they can find.
Is DeFi really that decentralized?
Speaking of exploits, the biggest exploit that hit the news over the last few months was the $62 million dollar exploit which occurred over on Curve Finance — one of DeFi’s staples for stablecoin swaps.
What I think people fail to realize about the Curve Exploit is not just the impact of $62 millions dollars lost, but a potential liquidation cascade that could have created an immense external fallout and ripple effect which may have devastated a countless number of lending protocols which all had exposure to the $CRV token. If Curve founder Michael Egorov not been able to sell off nearly 40 million of his $CRV OTC nearly half a billion dollars worth of liquidation, we may have seen impacts similar to those that we saw in FTX’s collapse back in late 2022.
In case if you were wondering, the collapse of FTX was spurred by a tweet from Binance founder CZ to sell off approximately $529 million dollars worth of $FTT, the native asset to FTX:
For comparison’s sake, Egorav’s position in his collateralized $CRB was not quite as large, worth approximately around $350–400 million prior to the exploit. Not quite apples to apples, but I’d still argue a significant threat nonetheless.
In addition, thanks to certain government actors, DeFi protocols considered “decentralized” are showing their weak points even without being exposed to exploits. I’m not going to make accusations here, but back in July, multichain — one DeFi’s most widely used bridges had approximately $228 million dollars worth of assets withdrawn coincidentally around the same time that the founder and CEO was arrested by government officials. Regardless of the true factors why — the news show that there are still significant and alarming key points of weakness in some of DeFi’s protocols, no matter how “safe” you might be keeping your private jeys.
Going back to my main argument— the fragility experienced by one entity’s loan (or bad choice) and the consequences of one actor to give the entire cryptomarket a black eye, shows that DeFI isn’t necessarily as “decentralized” as many claim it to be.
With all the fragility surrounding DeFi, it makes sense why so many people are driven to simply HODL Bitcoin, whether it’s in their own personal cold wallet or in hopes to buy into one of the 8 pending bitcoin spot ETFs that are awaiting approval.
Despite all the bulls, we’re still in a crab (or maybe even still a bear) market
On June 15th when Blackrock announced its application for a spot $BTC ETF, the price of $BTC jumped a little more than 10% and since then has been scaling back to just below $30k. If/once approved, estimating that we might see in-flows to the $BTC marketcap in the range of $100–$200 billion dollars, it’s amazing to me that this move wasn’t higher:
This curtailed price action leads me to believe that we’re still definitely not in a bull market, because considering that the total marketcap of $BTC is below $600 billion, the market still appears to be acting that it doesn’t have all the good news of these spot ETFs priced in. Correspondingly $BTC’s fear and greed index still hasn’t shown any huge significant changes in market sentiment and has hovered in the neutral range for quite some time:
Personally I’m a bit relieved that the market is still a bit skittish and I hope that the bear/crab market continues on for at least a few more months — it gives me that much more time to accumulate more bitcoin and be ready for the next inevitable bull cycle.
Crypto is not a spectator sport
And lastly, as I haven’t been able to invest as much time as I normally have, it ceases to amaze how quickly the crypto-landscape changes and how lucrative/detrimental it can be to stay on top of your investments. Nearly every protocol team I’ve been tracking has gone through significant upgrades and changes, and there’s countless more new ones that I’m working on reading up on and catching up with now.
Changes such as LP deprecations can happen on the turn of the time, meaning that if you have a significant amount of tokens in a deprecated pool — this is time/money that you’re bleeding away in non-realized gains. It serves as ongoing justification for why I’ve spent so much time researching yields, for as one trend/narrative is ends, it seems like two more begin.
Going forward, be on the look out for future articles where I’m processing through some of the information and sharing some of the things that I’m learning while I’m Messin’ with Crypto’s!
Conclusion
Thank you everyone for continuing to be part of this journey with me and for taking the time to read this. Be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
