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MEMO W14 APR 2024

If you want to make it, you have to believe in something. - xh3b4sd

The ETH / BTC ratio has fallen sustainably below 0.05 for the first time in a long time. Unironically the death of Ethereum has been announced again by the loudest and blindest on social media alike. It is fair to say that the people are still voting in the market, while I remain resolute in my thinking that the weighing will inevitably happen at a later point in time. In my mind, the opinions on the crypto niche internet can be divided into traders and builders. The traders have abandoned Ethereum despite supporting it in the past. And the builders, well, they just keep building. The amount of innovation happening on Ethereum while securing hundreds of billions of USD in economic security is at an all time high. The future of Ethereum was never so promising based on my world view and I am happy to side with the builders here. Ethereum is dead. Long live Ethereum. The crypto industry is often so confusing because the discourse happens online, and the most short term incentivized actors are often the loudest. Those loud voices come from speculators and traders who have something to lose, while those who have something to win by pursuing their own vision for the future are silently building towards it. Prominent voices have raised concerns that we are now in the 7th inning of the crypto cycle and that we have "one last push" left in the barrel. Most gains have already been had, we are being told. It was only two weeks ago when we discussed certain opinions because at that point in time we have heard that the bull market were only 4 months old. Now, two weeks later we are apparently in the 7th inning. What I am concluding for myself is that most people do not know what they are talking about. Individuals do all live in their own social reality which may very well be meaningless for ourselves. My mental model for the world looks something like this. Liquidity, attention, innovation, adoption and change are all some form of energy. And energy flows in more or less non-deterministic cycles. The biggest piece of energy in that equation is liquidity, which is still expected to rise according to its own 60 month cycle. It is still an election year. It is still only the beginning of the second quarter. And there is still no alternative future without blockchain networks. As for BTC, which has always been the yardstick of any cycle, we have probably time until we reach within 10% of 100,000 USD per BTC, which could theoretically mark the beginning of the end. From such a point forward, we would maybe see a couple of weeks more exuberance in alts. As described, this was the playbook of past cycles. We just have to be cognizant of the fact that the institutional adoption of crypto might change the nature of our cycles forever. We are truly adrift in unchartered waters. And this time around, everyone has to think for themselves.

Headless brands rule everything around me. You heard about the unicorn run by a single person in the future because automation will enable that. What was unheard of is the unicorn run by 15,000 individuals who contribute what they want while getting rewarded for what they can afford to lose. Onchain brands like ↑ may achieve so much more in less time. I got Higher pilled this past week because of its vision of an onchain lifestyle brand. Throughout my entrepreneurial endeavours I was always looking for an idea about the future that can have long lasting effects on people's everyday mindset. And then I came across the Higher community on Farcaster, which is centered around the idea that Higher is a lifestyle. That lifestyle is aspirational, for a better future. The token associated with that community is not the most important component here to me personally, because the upward pointing arrow is so elegant and simple, that it can be connected with almost anything. The Higher brand is headless, which means that there is no hierarchical structure to its own organization. Higher simply flows like the wind, based on what its people want to see in the future. And just like the wind, it is able to spread into any tiny pocket of the digital and physical world alike. People meme onchain. They create designs for fashion brands. They organize meetups and sports clubs. A farmer in Kenya got paid to purchase a goat and name it Higher. Now another community member is traveling from Seattle to Kenya in order to meet with the goat. The crazyness we are seeing onchain today is only the beginning of a dynamic community enabled world. It is just incredible to see how 15,000 strangers can simply come together and create a movement that is able to infect and inspire the human mind so we can all be better tomorrow. Definitely higher!

BlackRock's BUIDL fund accrued almost 300 million USD onchain after two weeks of deployment. We have seen some podcasts with Carlos, the CEO of Securitize, which is the company managing the technical side of the onchain infrastructure here. It sounds like there is a lot of DeFi composability on the roadmap. For instance, I could see Circle use the BUIDL token to give USDC an interest rate derived from the yield that BlackRock manages via money market funds. Another problem that I have heard Carlos articulate is that all the stablecoin collateral on exchanges does not do anything at the moment in terms of yield. We could then envision a future in which every stable collateral becomes a productive asset, earning yield while being held in escrow. Those are the early days of the onchain economy. Let's celebrate the moment and be grateful to be part of it all.

When I was keeping track of some numbers this week I was surprised to see that the DEX volumes on Solana have somewhat stagnated, while the amount of failed transactions on the Solana network has reached all time highs of 75%. That means 3 out of 4 transactions on Solana are failing and people submit transactions now until something eventually works. Based on what we know today, the Solana meme coin season lasted for all of Q1/24, and yet, on a weekly basis, the trading volume on all of Solana did never overtake Ethereum in that measure. To me it looks like the narrative has shifted over to Base now, the Coinbase L2. Base has accumulated a market share by TVL of almost 10% according to L2Beat. In fact the Base and Farcaster ecosystems have seen record active addresses and active users respectively this past week. And in all of the Ethereum ecosystem we have now for the first time seen more than 10 million transactions taking place every single day. The rent paid to Ethereum L1 by the L2 rollups has now dropped below 300,000 USD for any given day, while fees paid by users to the L2 rollups keep increasing. That means L2 rollups have never been more profitable while serving more users, which is another great moat for the Ethereum ecosystem overall. Higher for longer!

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