Edgy - The DeFi Edge ___

You'll spend 3 hours researching a token. Then 3 seconds deciding how much to buy. The second decision is the one that wipes people out. Here's the simple framework I use to size every position: 1. Decide how much you're okay losing first. Say you have a $50K portfolio. You find a token you like. If the trade goes wrong, you're okay losing 2% of the portfolio. So your max loss is $1,000. You buy at $2.50 and decide you'll sell if it drops to $1.50. That's a 40% drop. So: $1,000 ÷ 40% = $2,500 position. You put $2,500 in. If it falls 40% and you exit, you lose $1,000. Not a cent more. 2. You don't need to buy everything at once. This is where most people mess up. They find something they like and put the full amount in immediately. Instead, start small. Maybe you're comfortable putting $2,500 in eventually. Start with $800 to $1,000. If the project keeps doing what you expected and price moves your way, add more. If you were wrong, you found out with a small position instead of taking the full hit. 3. Think about what happens BEFORE the token hits your target. Maybe you think something eventually does 3x. Alrighty, cool. But can you handle it dropping 20% first? Can you hold if nothing happens for two months? Can you sit through a few ugly red days without panicking? Being right eventually doesn't help if your position is so big that you sell on the first dip. 4. If a position is stressing you out, it's too big. If you're checking the chart every 10 minutes, losing sleep, moving your stop, or your mood swings every time the token moves… Reduce the size and you'll sleep way better. You should be able to be wrong without it ruining your week. That's the biggest thing I've learned about position sizing. Bear markets don't take people out of the game. The first few bullish months do, because that's when everyone quietly doubles their size and stops thinking about the downside. Go smaller than your gut tells you.

Every bull run has had one new thing that pulled in a new wave of people & liquidity. In 2020 it was DeFi, in 2021 it was NFTs, and in 2024 it was the Bitcoin ETFs. The next one is HERE: real stocks trading onchain. A year ago barely anyone traded stocks onchain. But a few days ago, 2.6% of $DJT's entire trading volume happened onchain. A $23 TRILLION market is slowly starting to move over. Why it's Different This Time Tokenization has been called crypto's "next big thing" for years and almost none of it stuck, so I get the skepticism. But tokenized stocks + ETFs are already above $4B, and after watching the recent growth, I understand why people are comparing this to stablecoins in 2019. The difference is what you can do with these stocks once they're onchain. Buying $NVDA on a blockchain instead of a brokerage app wouldn't change much on its own. But onchain, you can put your stocks into a liquidity pool and earn fees on them, or borrow against them without selling. That's DeFi running on top of the stock market, something TradFi can't offer. It also helps that everyone already understands stocks. You don't need to explain $NVDA to your uncle the way you had to explain yield farming or an NFT. Three things tell me this is real: • The supply is growing on every major chain • People are putting these stocks to work instead of just holding them • The SEC just gave them a legal path to exist 1. The supply is showing up everywhere Tokenized stocks alone have grown to around $3.4B, while tokenized ETFs just hit an ATH of roughly $680M. The growth is spread across chains too: • BNB Chain: +$163.9M • Ethereum: +$127.9M • Solana: +$69.9M • Robinhood Chain: +$36M 2. People are actually using them Supply growing is the easy part. The real test is whether people do anything with these tokens, and they're starting to. Robinhood-issued stocks added roughly $54M into Uniswap over the last 30 days, with $SPY alone accounting for $13.3M and $NVDA $5.8M. These are people putting their stocks into trading pools and earning fees on them, which is the kind of DeFi activity that separates this from just trading stocks on a new app. Once there's enough liquidity sitting there, people start trading against it. Robinhood Chain handled a little over 2% of traditional trading volume for both $HIMS and $AMC in the last few days. For scale, HIMS trades roughly $260M a day in traditional markets, AMC roughly $180M and DJT roughly $40M. Tiny compared with Wall Street, but pretty wild for an onchain market that basically didn't exist a year ago. 3. The SEC just cleared the path The biggest risk hanging over all of this was regulation, and the SEC just moved in the other direction. Its new five-year exemption gives real U.S. stocks a path to trade onchain, as long as the product keeps actual shareholder rights like dividends and voting attached. That matters most for the venues already running. They've been operating under a cloud where the whole thing could get shut down on any given Tuesday, and serious money won't touch a market that might not exist next quarter. With a sanctioned path in place, it's much harder to argue the category shouldn't exist. How to play it • Try it yourself. Buy one tokenized stock with a small amount, wherever it's available to you, so you understand how it works before the retail wave shows up. • Watch the rails, not just the stocks. The chains pulling in supply (BNB Chain, Ethereum, Solana, Robinhood Chain) are positioned to catch the flow if this keeps growing. Robinhood is building the whole stack, from the app to its own chain, which makes it one of the more direct bets on this trend. •Track the lending side. When tokenized stocks become widely accepted as collateral on major lending markets, that's the stablecoin 2019 moment playing out in real time. Volumes are still tiny, liquidity gets thin outside the big names, and you're trusting the issuer to actually hold the shares, so check what rights your token gives you before you size into anything. The bigger picture Every past cycle brought in a new crowd, from the degens in DeFi to the collectors in NFTs to the boomers who came in through the ETFs. Tokenized stocks could bring in everyone who already owns a brokerage account, which is a much bigger crowd than any of them. Each one becomes a crypto user the moment they buy their first onchain share. We just need a fed rate cut and we're fucking back in business.

🗡️ What DeFi Shipped 🚢 (Sept 23): Circle launched its own L1, and Aave and Compound both built doors for institutional money. Here are 14 big updates in under a minute: • @Arc, the L1 from @circle, went live. TVL (which could be rented) looks solid, but the reception across CT was poor. • @aave proposed custodied collateral lending with @Anchorage holding the collateral. Institutions could borrow stablecoins against Bitcoin that never leaves regulated custody. • @Compound_xyz opened its Institutional Market for USDC borrowing, with LTVs up to 87% on ETH, 85% on wstETH, and 81% on wBTC and cbBTC. • @pendle_fi went live on Robinhood Chain with yield markets on tokenized stock dividends, starting with NVDA maturing October 15 and PFE maturing December 10. • @Uniswap shipped StablePair Hook, a v4 hook that sets LP fees based on how far a pool has drifted from its reference rate. Live on two Ethereum pools, USDC/USDT and USDC/USDG. • @base published the spec for Validity Transactions, which the chain includes only when onchain conditions match, gated on balance, storage, block number, or Flashblock index. • @MetaMask now auto-reverts a transaction when real execution doesn't match what the wallet simulated. It targets "red pill" attacks, where a contract behaves one way in simulation and another onchain. • @Pumpfun replaced Cashback Mode with Holder Rewards. Holder Reward tokens now pay out just for holding, with higher ceilings the longer you hold. • @LidoFinance and @Stakely_io opened a public ETH staking vault built on stVaults, pairing ETH staking with the EarnETH DeFi strategy. • @RenzoAI launched Renzo Basis, an automated delta-neutral basis trade on @HyperliquidX supporting BTC and HYPE at launch. • @zama scaled up confidential DeFi with 16 yield vaults across five institutional curators, covering USDC, USDT, WBTC, AUSD, and tGBP, all deployed on @Morpho. • @0xMiden, the privacy-focused chain incubated by @0xPolygon, shipped testnet v0.16, the last major release before mainnet. • @DeriveXYZ proposed V3, a zkVM exchange settling on Ethereum L1. The matching engine and sequencer state transitions get proved in a zkVM, with user funds custodied in L1 contracts. • @verantaxyz, the leveraged-trading protocol on @base, rebranded from Avantis and dropped its invite-code gate. I’m fine with institutions keeping their custodians and compliance teams bc that’s probably what it takes to get them comfortable using DeFi. I just don’t want that to become the only way to use it. I’d still like to borrow against my holdings at 2 a.m. without asking someone for permission.

🗡️ The Damage Report (Sept 21) 🚨: Half of this week's damage never touched a smart contract. Some updates covering hacks, a wind-down, a phishing wave, and more: • Balancer proposed an orderly wind-down: no new business, pausable pools dropped to withdrawals-only on October 30, and at least $9M of treasury distributed to BAL holders who burn their tokens. Snapshot runs September 25 to 29. • Trezor's third-party email provider Brevo was breached and used to send phishing mail from Trezor's own domain. Roughly 347k addresses got it, and 2.5k clicked before the domain came down. Check the sender domain is the advice everyone gives, and this week it would have failed you. • Wyoming pulled its FRNT stablecoin off LayerZero and moved it to Chainlink CCIP, citing a "repeated pattern of major operational security failures," including failure to keep proper control of a private key managing a live FRNT deployment. LayerZero's CEO disputes it, saying the authority involved was view-only metadata. • A Safe on Ethereum lost ~$7.73M in rsETH when an attacker used a public keeper multicall to push its Uniswap V4 LP module into a malicious hooked pool that unwrapped aETHrsETH. An MEV bot then extracted the funds in the same block. • Nomic's transaction-forwarding flaw let an attacker double-spend nBTC, minting 40.65 nBTC with nothing behind it back in June. Nobody noticed for 74 days. • ChainFlip lost ~736k USDT on Tron after an attacker attached their own memo to transactions validators had already signed. • Ether fi lost ~15.45 ETH to a missing access-control check in AtomicQueue. SlowMist disclosed it to the team privately before going public, which is why this one stayed a rounding error. • Yam Finance was drained of about $121K after an attacker self-delegated enough YAM to pass proposal #45 and seize the Timelock. Governance capture is still an underappreciated risk. The Trezor one bothers me the most. Hard to keep telling users to “be more careful” when the phishing emails come from the company they’re supposed to trust.

Pump fun generates $677M a year, yet PUMP still trades at a discount to its peers. Is it a bargain, or cheap for a reason? One researcher makes a compelling bull case for Pump. That’s the first of my top 7 reads this week:

US T-bills pay ~4%, virtually risk-free. So before taking more risk in DeFi, I want to know who’s paying the extra yield and why. 3 opportunities paying 7% to 11.5% caught my attention. Here’s how they work, what could go wrong, and how quickly you can get out: 1. $sUSDai: ~7% net APY | Ethereum Buy $USDai, stake it into $sUSDai, hold it. The yield is interest from people borrowing against GPU hardware, plus Treasury yield on reserves. The dashboard currently shows around $585M in total deposits and 6.98% net APY. You're taking on exposure to those GPU-backed loans, so I'd want to understand what happens to my investment if borrowers stop paying. Redemptions are queued and processed in fixed windows, described in the technical docs as, for example, 30 days. They also depend on sufficient liquidity being available. I wouldn't treat that as a guarantee that my money comes back within a month. 2. Bitwise Premium RWA $AUSD Vault: ~8.9% APY | Ethereum Deposit $AUSD into the Bitwise vault on @Morpho. It lends that out across three markets backed by $PST, $sUSDai and $PRIME. Borrowers pay the lending interest, but that isn't the entire headline yield. The displayed 8.89% combines 5.18% vault yield with a separate 3.70% AUSD component. I'd check the terms of that extra yield rather than assume it lasts. About $19M is deposited. Only $1.43M is currently liquid, and two of the lending markets are above 93% utilization. That's the number I'd stare at. If a lot of depositors want out at once, withdrawals can be delayed. One more thing. One of those markets accepts sUSDai as collateral. So if you also hold #1, you're not as diversified as the two different product names might suggest. 3. $ONyc: ~11.5% advertised APY | Solana Buy $ONyc on Solana and hold it for exposure to reinsurance premiums and returns earned on the underlying collateral. OnRe advertises an estimated 11.54% APY. This one's the odd one out. Insurers pay to transfer some of their claims risk to someone else. With ONyc, you're investing on the side that takes on that risk. That means higher-than-expected claims can eat into returns. I'd want to understand the potential losses, not just the expected premiums. I'd also check how much liquidity is available for redemptions and what happens when withdrawal requests exceed it. And I'd leave leveraged versions alone. I don't need borrowing costs and liquidation risk on top of the reinsurance exposure. These yields are interesting, but I wouldn't treat them as somewhere to park cash. Before putting money in, I'd want to be comfortable with both the potential losses and the possibility of waiting longer than expected to get out.

Did you miss the early Robinhood runners? There could be another chance to run it back. @arc mainnet goes live today. Here are 6 projects I’m watching before the timeline catches up: 1. Tolly ($TOLLY): Launchpad + trading terminal @TollyLabs combines a launchpad, a trading terminal and onchain analytics. It has already done roughly $4.9M in volume across 46K trades. Part of the fees goes toward $TOLLY buybacks and burns, with around 28.9M TOLLY already removed from circulation. 2. Long ($LONG): Stock-paired memecoin launchpad @Longdotsupply wants to pair memes with tokenized stocks, taking the Robinhood stock / meme experiment onto Arc. I find this more interesting than another standard meme launcher, though it depends on whether tokenized stocks actually gain traction on the chain. 3. Arguspad ($ARGUS): Memecoin launchpad @Arguspad is a straightforward memecoin launchpad. I’m watching whether it starts producing actual runners. One or two successful launches can change where traders spend their time, but I’d want to see that happen before getting too excited about $ARGUS. 4. Warp ($WARP): Cross-chain USDC launchpad @circlewarp combines a launchpad and trading terminal with cross-chain USDC transfers through CCTP. The appeal is being able to move USDC from another chain and trade tokens on Arc without going through three different apps. 5. Archemist: X-based token launcher @Archemistdotfun lets you launch tokens through an X bot. Its V4 setup includes anti-snipe mechanics, creator buys, buybacks and holder rewards. I’m curious how the anti-snipe mechanics work in practice once people are trading with real money. 6. ArcDEXScan: Scanner + aggregator @ArcDEXScan combines a scanner, aggregator and launchpad. This is one I’d keep open even without buying anything through it. If launches end up spread across 20 different venues, having somewhere to see what’s moving would save a lot of digging. For the first few days, I’d stick to official Arc / USDC routes once they’re live, use a fresh wallet and avoid unlimited approvals. I wouldn’t try to guess Arc’s $PONS before the market opens. I’d rather see which venues get real volume and whether their launches hold up. Anyway, this is a "watchlist" and not recommendation to buy. Market's tanking + new chain + early stage projects = high risk.

I've closed good trades early just because I got tired of watching them. If you've traded perps you know the annoying part. You open a position, watch your margin, keep an eye on liquidation, and even when the trade goes your way, the leverage you started with doesn’t necessarily stay there. A leveraged token handles that differently. Instead of managing the perp yourself, you buy a token that gives you leveraged exposure, while the position underneath keeps rebalancing toward the target. That’s basically what @BounceTech is doing. Its leveraged tokens are ERC-20s backed by Hyperliquid perp positions, so the rebalancing just happens in the background. And they’re starting their first trading competition today with $20K+ in prizes. A $100 buy gets you in automatically, with weekly rewards across PnL, ROI, volume, and profitable finishes. Take $ZEC for example. Over the past month: • $ZEC: +132.7% • Equivalent 5x perp: +663.7% • Bounce ZEC5L: +1,387.4% Same market, but the path is very different because the leveraged token keeps rebalancing instead of slowly de-levering as the trade moves in your favour. That can help a lot in a clean trend. Leveraged tokens are built for trending markets, where compounding can allow them to outperform perps Whereas in choppy markets, perps can be the better vehicle since they don’t experience the same volatility decay. Ultimately, leveraged tokens and perps each have environments where they work best, it just comes down to choosing the right instrument for your trade. The protocol itself has also been picking up: • $57.7M rolling 30D volume, up 468% • $2.84M open interest, up 80% • $384M+ total volume Perps Dexes gave leverage to traders. Bounce is packaging that leverage into something that’s easier to hold and manage without sitting on the chart the whole time.

Everyone knows about pons. Here are 6 underrated dApps on Robinhood you should pay attention to: 1. @PareStocks ($PARE): A Pendle-style model for stocks. Pare splits a tokenized stock into two tokens. PT is the stock at a discount, no dividends. YT is every dividend it earns. Merge them back any time, free. Protocol revenue goes to deepening those markets and buying back and burning PARE. The team flags that early pools are thin, and the market cap only crossed $1M two weeks ago. Most experimental one on this list, and the one I'm least sure about. The mechanism is clever. What I haven't seen is demand for trading those separate exposures. Demand for the PARE ticker is a different thing. 2. @sherwoodagent ($WOOD): AI-managed investment funds. Sherwood is building onchain funds where agents propose strategies, depositors can vote them down, and guardians check every transaction before it executes. WOOD is what guardians stake to do that job. Correct calls earn fees (capped at 5% guardian fee). Approving malicious calldata gets you slashed. No emissions, no mint after TGE. It's a ~$5.6M market cap, ~82% off its high, and the docs still describe testnet. Mainnet is the milestone. I'm not calling this adoption yet. 3. @fablesfi ($PROLOGUE): The pre-launch DEX play. Fables is a ve(3,3) DEX on Uniswap v4 with fees tailored to the asset. Stock market hours for tokenized equities, volatility for crypto. It's live: $10M+ in deposits and ~$200M volume in week two. PROLOGUE converts to FABLES at TGE, reportedly 40:1 (1B PROLOGUE → 25M FABLES). It's trading around a $17M market cap. That conversion is the whole trade. Work out what 25M FABLES is worth at a realistic launch FDV, then decide if $17M is cheap. PROLOGUE's own chart tells you nothing. 4. @NetNetCap ($NET): The treasury play. A reserve-backed token in the OlympusDAO v1 lineage, rebuilt without a policy committee. USDG treasury, bond sales, buybacks, all formulaic. It reports backing per token, so you can compare it to market price directly. Two things to know. There's a 5% fee on mapped AMM pairs (v4 and UniswapX dodge it, permanently). And staking pays zero at or below backing, full rate only at a 1.75x premium. Its tokenized stock holdings sit outside the reserves that count toward backing. ~$66M FDV, and it's already round tripped from ~$1,970 to ~$990. The question is whether backing can grow faster than the market prices in. "Reserve-backed" doesn't make something cheap. 5. @TheIndexFi ($INDEX): Trading fees turned into stock payouts. Every INDEX trade takes a 3% fee in ETH, buys a basket of 18 tokenized stocks, and drops them into holders' wallets every 15 minutes. No staking, no claiming. Its Indices product routes fees the same way plus locked liquidity for INDEX. The numbers are small. ~$456K in fees over 30 days, ~$291K to holders (per DefiLlama), against a market cap in the $30M+ range. So the yield is real but it's not the reason to own it. The bet is that the fee-to-stock mechanic pulls more volume. Judge the payouts against what you paid for INDEX, and whether the trading funding them lasts. 6. @shroom_network ($SHROOM): Stock-token liquidity with a burn mechanism. SHROOM owns 48 pools (and counting) pairing itself against stock tokens like NVDA, MSFT, and MU. It earns fees on all of it, including the price gaps between the token and the real stock when markets are closed. V2 changed the flywheel. Stock token fees route back into their pools for depth. SHROOM fees now get burned, 13.6M so far. ~$16M market cap, down from a $40M+ high right after launch. I want to see recurring burns from real pool volume, not a burst around the announcement. 7. @ponsdotfamily ($PONS): The buyback play. Gonna talk about Pons here since they're the biggest thing on Robinhood and going through a dip now. ~$108M in fees over the last 30 days, ~$20M of that protocol revenue (per DefiLlama). Peak day was $5.95M, more than Pump fun did that day. 80% of protocol revenue buys back and burns PONS. That's the protocol's 30% cut of the 1% trade fee, not 80% of everything traders pay. ~29% of supply is already gone. Market cap sits around $420M, down ~38% from the Sept 5 top. Still my fav of the seven. It's exposure to launchpad activity without picking the next memecoin. These are research leads, not recs to buy. Anything on Robinhoodyou're bullish on that isn't here? Lemme know, gonna make a v2 in a few weeks.

🚨 The Damage Report (Sept 14) Some updates on various hacks, outage, lawsuit, and shutdown in DeFi in one post: • Notional Finance's escrow contract got drained for $1.7M in DAI and USDC. The exploiter swapped it into 689.2 ETH and sent it straight to Tornado Cash. • Someone lost $2.1M after clicking a phishing link that showed up in a ChatGPT response. Yes, really. Check your links, even the ones AI hands you. • Liquid Network lost ~4,000 BTC (~$320M). Attackers found a hole in its transaction-validation software and minted unbacked L-BTC. • Robinhood Chain went dark for 14+ minutes on Sept 4. That's ~8,400 missed blocks at 0.1s a block. Not great for the chain everyone's farming right now. • Ledger is staring down a $500M class action over its 2023 data breaches. The lead plaintiff lost nearly $2M to scammers pretending to be Ledger support. • Harmony is shutting its mainnet after seven years and moving ONE to Ethereum. Deadline to exit smart contracts was Sept 10. • Router Protocol is calling it after four years. Burning 303M ROUTE and pulling off CEXs before the Sept 30 shutdown. Seven years for Harmony and 4 for Router. Nothing in this space is too old to die.