We Want 20% Stablecoin Yields

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Good Morning.

The crypto markets look heavy. BTC and ETH remain at key levels that they need to defend, otherwise we’re going lower to the $38k and $2k range. Meanwhile, Grasycale outflows continues, Celsius might be dumping ETH, and the US governtment/Mt.Gox plans to sell Bitcoin. Hang on tight! 🎢

In Today's Email:

• What Matters: USDe hits $120M 💵 

• Founders Highlight: Jonathan and Yi of Axiom 🌐

• Deal Flows: Sygnum $900M Valuation 🦄 (almost)

We are now publishing airdrop alphas on our telegram!

WHAT MATTERS

Ethena Labs’s USDe Supply Hit $120M

State of play: Bloomberg did a reporting on the state of interest-bearing stablecoin in crypto, highlighting Ethena — stating that crypto fans are still “lured by 20% stablecoin yields”

• Ethena Labs’s stablecoin or “synthetic dollar”, USDe, saw its supply surpassed $100M as of January 16.

• USDe is backed by a strategy involving long stETH and short ETH perpetual futures, aiming to generate yields from both positions.

• sUSDe yields peak at 45% annually, leveraging ETH funding rates, stETH returns.

However, the surge in yield-bearing stablecoins is raising concerns.

• Bloomberg argues that holders of such “stablecoins” will be stranded with worthless tokens if the mechanics behind them collapse, like in the TerraUSD case.

• Michael Selig from Willkie Farr & Gallagher LLP points out that unique US securities-law challenges with yield components often result in offshore offerings.

• Nathan Allman, CEO of Ondo Finance, states that interest-bearing stablecoins generally pose higher risks for consumers.

• Despite risks and regulatory uncertainty, venture capitalists continue to heavily invest in stablecoin-related ventures.

• Nic Carter of Castle Island Ventures claims that his firm’s last five deals have all been related to stablecoins. Carter said he’s particularly excited about interest-bearing stablecoins.

Why it Matters: Stablecoin is crypto’s number one PMF. There’s a clear demand from market participants for an onchain interest-bearing stablecoin

For builders and investors: It makes sense that VCs are flocking to this sector as the upside (stablecoin tx vs global money flow) is still significant — at the same time, the product clearly has a PMF as shown by Tether and Circle.

• Remember, Tether makes billions in profits (cold hard cash), every year.

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BUILDER-INVESTOR HIGHLIGHT

Jonathan Wang and Yi Sun of Axiom

Jonathan Wang and Yi Sun are the co-founders of Axiom, a protocol enabling smart contract developers to fetch historical Ethereum data and conduct intensive off-chain computations.

Previous backgrounds: Both Wang and Sun hold BAs, MAs, and PhDs in Mathematics. They earned their BAs and MAs from Harvard and also hold MAs of Advanced Study in Mathematics from the University of Cambridge.

• Wang obtained his PhD from the University of Chicago, while Sun obtained his from MIT.

• Wang was a Pure Math Instructor and NSF Post-Doc Fellow at MIT from 2018 to 2021. Before Axiom, he was a Senior Post-Doc Fellow at Perimeter Institute.

• Sun was an Assistant Professor at Columbia University and now he is an Assistant Professor at the University of Chicago.

The big idea: Axiom is designed to help smart contract developers incorporate historical transaction activity in a trustless manner for onchain applications.

• Axiom is also using its ZK proof technology to verify the authenticity of these data, as well as enabling onchain applications to compute over more data at a lower cost.

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INSIGHTS

AltLayer Airdrop Goes Live at $2.9B FDV

AltLayer's native token, $ALT, goes live and starts trading on CEXs. The token recorded $300M in trading volume across exchanges within four hours of launch.

• $ALT is currently trading at approximately $0.32, achieving a $3.1B FDV with 11% free float.

• AltLayer launched the airdrop claim for users chosen based on a Jan. 17 snapshot, including Celestia stakers, EigenLayer supporters, AltLayer NFT holders, and community campaign participants.

• Celestia stakers are not able to claim the airdrop yet.

• The airdrop distributes 300M of $ALT (~$96M), representing 3% of the total supply in its first round.

• Over 29,000 wallets claimed 100.7M of ALT tokens, 33% of the airdrop, with the top ten addresses receiving about 4.8M ALT.

DEAL FLOWS

Sygnum Raises $40M at $900M Valuation

Deal flows remain strong this week, we saw $145M+ in deals 📈 

Sygnum announced that it secured over $40M in strategic funding led by Azimut Holding, nearing closer to a unicorn status at a $900M valuation.

• The raised amount exceeded the target of $35M.

• The capital will be used to to expand into new markets and enhance its regulated products, like bank-to-bank digital asset services.

• Sygnum plans to enter one market in EU and APAC each.

• Sygnum has acquired operating licenses in Abu Dhabi and Luxembourg.

• Sygnum manages $4B+ in assets from 1,700 clients in 60 countries.

Deal flows in the past week:

• Bitflow, $1.3M Pre-Seed Round

• Bagel, $3.1M Pre-Seed Round

• Synonym Finance, $1.5M Seed Round

• Polymer Labs, $3.6M Seed Round

• Masa, $5.4M Seed Round

• Root Protocol, $10M Seed Round

• Ingonyama, $21M Seed Round

• Dinari, $10M Seed+ Round

• Polymer Labs, $23M Series A

• Web3Intelligence, $4.5M Private Round

• Arcade2Earn, $4.8M Private Round

• Axiom, $20M Unknown Round

• Sygnum, $40M Strategic Round

• AMBBi, Undisclosed $ Strategic Round

• Cadence, Undisclosed $ Strategic Round

• Scallop Protocol, Undisclosed $ Strategic Round

QUICK BITES

• Telefónica partners with Helium.

• OKX set to phase out its mining pool.

• UK Supreme Court refuses Craig Wright.

• BOE remain undecided on a 'digital pound.'

• Tesla’s BTC holdings remain unchaged in Q4.

• The US files intent to dispose $117M in Bitcoin.

• SEC delays decision on Grayscale's spot Ethereum ETF.

• HashKey launches three crypto indices with FTSE Russell.

• Solana Labs releases token extensions for SPL token standards.

• Lido DAO rebukes LayerZero by endorsing rivals for crypto bridge.

• Kraken hires ex-Coinbase execs to bolster compliance & expansion.

• Elwood gets FCA nod to offer trading of security tokens & derivatives.

NOTEWORTHY READS

• Bridget Harris’ read on data availability layers.

• Mohammad Fouda’s read on permissionless applications on Bitcoin.

• Li Jin’s read on multi-hit wonders: embracng apps with short shelf life.

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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.