Aerodrome Dominates Base with $1B+ in Deposits

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Good Morning.

I feel kinda bad for Kalshi. The startup spent years and a lot of money battling to launch prediction markets for elections. Less than 24 hours after it won the court battle, Interactive Broker launched the same market.

Meanwhile, Polymarket has a massive headstart because it went the more “cowboyish” route. Sometimes, being a founder means creating the right amount of imbalance — and in this case, Polymarket did the right thing.

In Today's Email:

• What Matters: Aerodrome $1B TVL 📈 

• Founders Highlight: Meltem of Crucible 👩‍🦰 

• Deal Flow: Binance Labs backs Sophon 💰️ 

You read and share. We listen and improve. Send us feedback at [email protected].

TOGETHER WITH

VaultCraft launches V2, TVL skyrockets above $100M

VaultCraft launches V2, partners with Safe, and secures $100M+ in Bitcoin

• Matrixport, Asia’s leading crypto providers, commits $100M+ in Bitcoin

• OKX Web3 to launch Safe Smart Vaults with $250K+ in rewards

Earn Now

WHAT MATTERS

Aerodrome Dominates Base with $1B+ in TVL

State of play: Aerodrome Finance now holds over $1B in deposits on Base, a Layer 2 Ethereum network incubated by Coinbase, accounting for more than half of the network’s total value locked (TVL).

• Base’s TVL has surged to $2B, a 5x increase since early 2024.

• Aerodrome makes up more than half of Base’s TVL.

• Aerodrome, launched by Velodrome Finance in 2023, is the largest DEX on Base in terms of TVL, volume, and fees, surpassing protocols like Uniswap and Aave.

• Last month, Aerodrome processed ~$9B in on-chain swaps volume.

• Most of the trading volume came from Slipstream pools, according to a tweet by the Aerodrome team.

• Slipstream pools are concentrated liquidity pools designed to reduce slippage, minimizing the difference between the expected and actual transaction price.

• Solana DEXs like Orca and Raydium each recorded volumes in the $9-$10B range

• However, Aerodrome’s volume remains lower than Uniswap and PancakeSwap.

Why it Matters: According to Toe Bautista, a research analyst at crypto market maker GSR, Aerodrome's high trading volume reflects liquidity providers rebalancing positions, not increased swapping activity.

What’s next: There seems to be a slight drama regarding Aerodrome's use of the GLP3 license from Solidly (the original DEX design written by Andre Cronje).

• Alexander from the Aerodrome team said that they're in touch with Andre and that everything is good.

For builders and investors: Aerodrome won because it created a platform that actually rewards liquidity providers + they benefit from being the beta token of the Base L2 ecosystem.

BUILDER-INVESTOR HIGHLIGHT

Meltem Demirors of Crucible

Intro: Meltem Demirors is the Founder and General Partner of Crucible, an early-stage fund investing in startups that brings digital and physical resources on-chain.

• Demirors and Crucible are seeking to raise $75M or two new venture funds called Crucible Capital Fund I and Crucible Capital Fund 1-A.

Previous background: Before launching Crucible in 2024, Meltem served as Chief Strategy Officer at CoinShares, overseeing $7B in AUM. She started her crypto career at Digital Currency Group, helping grow its portfolio and subsidiaries.

• Meltem has lectured at MIT and Oxford.

• She is an angel investor in 100+ startups.

• Prior to crypto, she worked in oil and gas and holds degrees from Rice University and MIT Sloan.

The big idea: Meltem and Crucible believe the main use of blockchains and tokens is to find, fund, and optimize the efficient use of limited resources on a large scale.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

Introduction to Yield Arbitrage

Credits to On Chain Times for the original article

State of play: Yield arbitrage involves hedging an asset's delta exposure while earning yield on both the long and short sides. This strategy, popular among traders and funds, can generate high returns in volatile markets.

On Chain Times explains how the strategy works, and provides specific examples:

Yields Across DeFi

• In early 2024, many yield farming strategies, like airdrop farming on EigenLayer, involved exposure to volatile assets, leading to unpredictable returns.

• Safer methods, like stablecoin yield farming, offer less risk but lower returns.

• Delta-neutral strategies—eliminating exposure to price movements—are preferred by sophisticated investors. This involves holding an asset long while simultaneously shorting it.

• A delta-neutral position means no exposure to asset price changes.

• For example, holding $100 in BTC and shorting $100 in BTC cancels out price movements, protecting against volatility.

Yield Arbitrage Strategy

• The goal is to capture yield on both sides. On the short side, perpetual futures provide funding payments to short positions.

• On the long side, holding assets like stETH can generate yield.

• For example, Ethena utilizes this strategy by staking ETH and shorting it on exchanges, paying out profits to sUSDe holders.

DEAL FLOWS

Binance Labs Backs Sophon Through a SAFT

Deal flows slowed down this week, we saw $40M+ in deals 💼 

Binance Labs has made an undisclosed investment in Sophon, a ZKsync "elastic chain" or Layer 2 network built on Matter Labs' ZK Stack.

• The investment comes ahead of Sophon's mainnet launch and token deployment scheduled for next month.

• This funding round is structured as a Simple Agreement for Future Tokens (SAFT).

• This deal follows earlier funding of around $60M from a node sale in May and $10M in a seed round, bringing Sophon's total funding to over $70M.

• The mainnet and SOPH token are set to launch next month, with more details on the token to be released later.

• Currently, Sophon has about 20 employees, with plans to hire a senior Rust developer and a business development professional for the Asia Pacific region.

Deal flows in the past week:

• LAYER, $6M Seed Round

• RD Technologies, $7.8M Series A

• Mind Network, $10M Pre-Series A

• RoOLZ, $1M Private Round

• SecondLive, $12M Private Round

• Initia, $2.5M Public Sale Round

• Mesh Map, $4M Unknown Round

QUICK BITES

• SEC appeals Ripple case ruling.

• Bitwise files for a spot XRP ETF.

• Grayscale debuts its AAVE fund.

• Taiwan's FSC drafts new crypto AML rules.

• Chainalysis CEO steps back for 'personal issue.'

• OKX and Axelar launch tech development stacks.

• IMF urges El Salvador to limit the scope of BTC law.

• Swift set to begin live bank trials of digital asset tx in 2025.

• Federal court clears Kalshi to list election betting contracts.

• PayPal executes the first business transaction using PYUSD.

• HBO documentary aims to reveal Satoshi Nakamoto's identity.

• Hyperliquid climbs to the top in daily trading volume amongst perp DEXs.

• JPMorgan says geopolitical risk could drive investors to gold and BTC.

• FTX estate prepares to sell $38M of locked Worldcoin tokens at a discount.

NOTEWORTHY READS

• Keyrock’s read on airdrops performance analysis.

• Lattice Fund’s read on 2022 seed stage retrospective.

• Ash’s read on marketing campaigns + KOL best practices.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.