Politics Token Season: DJT, Trump, and Martin Skhreli

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Good Morning.

While the alt market is being rekt left and right, politics-meme related tokens are making noise as the supposedly Trump-supported DJT token was launched, capturing the market’s attention, before Martin Shkreli admitted that he launched the token.

And oh… LayerZero opens up its airdrop eligibility checker.

In Today's Email:

• What Matters: Tether gold-backed stable 🧈

• Case Study: L2s vs ETH 🥊 

• Governance & Features: ENA restaking 🧱

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WHAT MATTERS

Tether Launches Gold-Backed Stablecoin

State of play: Tether announced the launch of a new category of synthetic digital assets, starting with a token called aUSDT (Alloy by Tether), which is backed by real physical gold stored in Switzerland.

• Tether described aUSDT as a cryptocurrency meant to mirror the value of the USD but is over-collateralized by Tether Gold (XAUT).

• Users can mint aUSDT by depositing Tether's XAUT as collateral at 75% of the collateral value.

• According to Tether, XAUT has a $570M market cap and is backed by physical gold stored in Switzerland.

• aUSDT is developed by members of the Tether Group, called Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V.

• Alloy by Tether is an open platform that lets users create collateralized synthetic digital assets.

What’s next: Alloy by Tether will soon integrate with Tether's new digital assets tokenization platform set to launch later this year.

Why it matters: This is Tether’s first significant move related to stablecoins in recent years.

Our take: As the market leader of the stablecoin sector, Tether continues to embrace its status as the preferred offshore digital dollar. To strengthen this position, Tether needs to be able to provide dollar exposure with minimized risk to the US government — expanding their products into gold-backed (and eventually other commodities such as oil) stablecoins makes perfect sense.

For builders and investors: If you’re in crypto, you’re dealing with offshore digital USD. Understand what this means and how to use it to your advantage.

CASE STUDY

L2s vs ETH

Credits to James Ho for the original tweet

State of play: In a recent tweet, Modular Capital's co-founder James Ho analyzed the performance of L2 tokens compared to ETH and found that L2 tokens have significantly underperformed compared to ETH.

• Currently, over $40B is locked in ETH L2s, up from $10B last year.

• There are 50+ L2s listed on L2BEAT, while the top 5-10 L2s account for over 90% of the total TVL.

• The top 5 L2s based on TVL are Arbitrum, Base, OP Mainnet, Blast, and Linea.

L2 tokens have generally underperformed as liquid investments compared to ETH. The valuation of major L2s relative to ETH has remained flat or declined despite the increasing number of L2s.

• Two years ago, only Optimism and Polygon were listed, representing 8% of ETH.

• Today, with the addition of Arbitrum, Starkware, and zkSync, they collectively represent 9% of ETH.

• Each new L2 token released dilutes the valuation of previously listed ones.

• Investing in L2 tokens has significantly underperformed compared to ETH over the last 12 months: ETH returned +105%, OP +77%, MATIC -3%, and ARB -12%.

Collectively, L2s have a current FDV of approximately $40B with $40M in annualized fees, resulting in a roughly 1000x multiple.

• In contrast, large DeFi protocols trade at substantial valuation discounts, typically in the 15-60x range based on the last month's annualized fees.

• Although L2s may generate significant fee income as they grow, current market dynamics and a saturated market could continue to dilute individual token values.

• Investing in a basket of L2s with high valuation multiples relative to their revenue might not outperform ETH in the long run.

James Ho also highlights the importance of application development and the need to switch the focus to the application layer from the infrastructure stack.

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INSIGHTS

PoliFi Tokens & DJT

DJT, a crypto token on the Solana blockchain, surged 180% while other PolitiFi tokens dropped 10%+ amid unconfirmed reports by Pirate Wires that former US President Donald J. Trump backs it.

• The report said that Trump's son Barron is "spearheading" the project.

• Meanwhile, PoliFi tokens named after the former president dropped significantly on the news, per CoinGecko data.

• The Trump campaign did not immediately respond to a request for comment.

• Crypto Twitter sleuths noticed that the $DJT Telegram group admins were also admins of a token supported by Shkreli.

• Shkreli denied involvement in the token but claimed to know that it was an authentic project from the campaign.

• ZachXBT tweeted that Shkreli claimed to have "over 1,000 pieces of evidence" proving he created the DJT token with Barron, seemingly referring to Barron Trump.

• Shkreli later publicly announced his creation of DJT during an X Spaces session he hosted.

FEATURES & GOVERNANCE UPDATE

Ethena Launched Generalized Restaking

On Monday, Ethena announced that it will begin to gradually introduce more functional utility for $ENA within the Ethena ecosystem starting with the launch of a generalized staking capability for $ENA with Symbiotic and LayerZero.

• Staked $ENA pools are set to launch on June 26th.

• Currently, $ENA can be locked in Ethena for 30x rewards or added to PT-ENA in Pendle for approximately 75% fixed APR.

• The initial application will facilitate USDe cross-chain transfers using the LayerZero DVN-based messaging system.

• Staked $ENA and $sUSDe will be the only new assets available for deposit in Symbiotic for the upcoming epoch.

• Staked $ENA in Symbiotic will earn daily Ethena 30x rewards per ENA, Symbiotic points, Mellow points, and potential future LayerZero RFP allocations if allocated to Ethena.

Other notable feature updates:

• F(x) Protocol launched arUSD.

• Symbiotic goes live on Ethereum.

• JellySwap goes live on Sei mainnet.

• Paxos launched Lift Dollar ($USDL).

• Berachain launched Public Testnet bArtio B2.

• Telegram launched a new digital goods and services payment system.

QUICK BITES

• Cumberland acquires NY BitLicense.

• HashKey targets Q3 to list platform tokens.

• US SEC closes investigation in Ethereum 2.0.

• DRiP Haus targets July for mobile app release.

• Drift partners with Ondo to launch RWA margin.

• Martin Shkreli claims he co-created the DJT token.

• Transak adds fiat-to-crypto onramp for PayPal USD.

• Hashdex proposes a new Ethereum and Bitcoin combo ETF.

• LayerZero opens an eligibility checker for upcoming airdrops.

• Arkham offers a $150,000 bounty to find the DJT token creator.

• Australian Securities Exchange to get first BitcoinETF from VanEck.

• Bitwise says Pantera is interested in buying ~$100M of Ethereum ETF.

NOTEWORTHY READS & MEME

• David Phelps’ read on the social app thesis.

• Coinmetrics’ read on decoding crypto tokenomics.

• Pet3rpan’s read on technical risk and cost as L2 moats.

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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.