AVAX Largest Upgrade Post $250M Token Sale

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Good Morning.

The market had a decent pullback but altcoins are getting absolutely rekt. PENGU launch was alright, with price action currently stabilizing. Arthur Hayes released a post predicting further dump until Trump’s inauguration and Eugene Ng Ah Sio reminded CT on what % of drawdown is considered “good” when exiting the top.

Our new podcast episode with Sandra from Kaito is up!

In Today's Email:

• What Matters: AVAX Largest Update 🔴 

• Case Study: Stablecoins Surge in 2024 📈 

• Governance & Features: Aave Proposes Exit from Polygon 🏃🚪

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WHAT MATTERS

Avalanche Largest Update ‘Avalanche9000’

State of play: Avalanche has rolled out its largest upgrade to date, Avalanche9000, aimed at significantly reducing costs and simplifying the launch of “subnet” blockchains.

• Key features include the Etna upgrade, which eliminates the need for validators to stake on the primary network when validating subnets.

• Additionally, Avalanche Community Proposal 125 lowers the base fee on the C-chain from 25 nAVAX to 1 nAVAX.

• Avalanche9000 also introduces tools that reduce Layer 1 deployment costs by 99.9%, paving the way for an influx of blockchain launches.

• Avalanche recently raised $250M in a locked token sale.

• Despite the advancements, Avalanche’s native token, AVAX, is trading down by 3.15%.

What’s next: With lower transaction fees on the C-chain, Avalanche might increase network usage, leading to greater utility and adoption of its smart contract platform.

Why it matters: The Avalanche9000 upgrade reduces costs, spurs subnet growth, attracts developers with incentives, and boosts network usage, enabling enterprise and government applications.

Our take: Avalanche’s mindshare has definitely been somewhat muted in the past 18 months as no projects on its ecosystem became a main character.

• This update might start a new effort to incentivize builders and regain mindshare.

For builders and investors: Picking a new chain to build on remains a much more political and alignment decisions rather than that of a technical one. Be mindful of this.

CASE STUDY

Stablecoins Surge in 2024

2024 marked a transformative year for stablecoins, solidifying their position as one of crypto’s most impactful innovations. Here are some key takeaways from Messari’s report on The Stablecoin Mega-trend:

• By May, monthly transfer volumes exceeded $3.5T, on par with Visa’s quarterly transaction volume, while the market cap reached $200B by Q4.

• No longer limited to exchange collateral, stablecoins have become essential tools for B2B and P2P payments, particularly in emerging markets.

• Stablecoins provide a reliable alternative to volatile local currencies, offer cost-efficient cross-border transactions, and enable seamless business payments.

• The rise of USDT on Tron, which benefits from deep liquidity and low fees, underscores stablecoins’ dominance in regions with limited access to traditional banking.

• Stablecoins' appeal extends beyond emerging markets, with innovations like on-chain programmability, reduced fees, and 24/7 availability revolutionizing payment rails.

• Protocols like Ethena and Huma Finance have showcased new models for yield generation and payment financing, expanding stablecoins’ use cases across industries.

• This evolution reflects stablecoins’ growing role as a bridge between traditional and decentralized financial systems.

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INSIGHTS

Aave Proposes Exit from Polygon Bridge

Aave contributor Marc Zeller proposed withdrawing Aave’s lending services from Polygon’s PoS chain in response to Polygon’s preliminary plan to deploy $1.3B in bridged stablecoins into lending protocols for yield generation.

• Zeller expressed concerns over the security risks and potential bad debt associated with rehypothecating user deposits.

• His proposal includes reducing risk exposure by setting strict lending parameters, discouraging further deposits, and increasing reserve factors.

• The Polygon Labs yield-generation plan is still in early discussion, with security as a stated priority.

• The proposal is currently in the ARFC (Aave Request for Comments) phase.

• If the community shows support, it will advance to a snapshot vote for preliminary approval, followed by the AIP stage for final community approval.

FEATURES & GOVERNANCE UPDATE

Ethena’s USDtb Goes Live

Ethena has launched USDtb, a stablecoin backed primarily by BlackRock’s BUIDL token, which holds over $500M in US Treasury bills.

• Unlike USDe, which relies on a derivative-based strategy, USDtb functions like traditional stablecoins, maintaining reserves equal to its circulating supply.

• Over 90% of USDtb’s reserves will be held in BUIDL, with the remainder in stablecoins or tokenized US Treasury products for redemptions.

• USDtb is designed as a secure alternative to USDe during periods of negative funding rates while also serving as a standalone product with a lower risk profile.

• USDtb will be issued only to whitelisted users following strict compliance checks.

• The stablecoin has undergone multiple security audits and is being considered for Spark’s Tokenization Grand Prix, which could enhance its liquidity and utility.

Other notable feature updates:

• Pendle launches PendleSwap.

• Nexus has launched its testnet.

• Spark launches savings on Base.

• Moonwell launches the Moonwell Card.

• Sonic Labs has introduced the Sonic Gateway.

• EigenLayer has launched a User Testing Program.

QUICK BITES

• FTX reveals a new repayment timeline.

• ENS picks Linea to develop its L2 network.

• CyberKongz says it has received a Wells Notice from the SEC.

• Coinbase responds to BiT Global's lawsuit over delisting wBTC.

• Polygon rejects proposal to use $1B+ of bridge stables for yield.

• US imposes sanctions on North Korea’s crypto laundering network.

• Ohio lawmaker proposes a bill to create a state-backed BTC reserve.

• Arthur Hayes predicts crypto will dump around Trump’s inauguration.

• Bloomberg analysts expect 'a wave of cryptocurrency ETFs' next year.

• Nuffle Labs partners with Wormhole and EigenLayer to bring restaking beyond Ethereum.

NOTEWORTHY READS & MEME

• Arthur Hayes’ read on Trump truth.

• 0xSmac’s read on TGE’s are not IPO’s.

• Wu Blockchain’s read on insights on Hyperliquid’s success.

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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.