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30 SEP ’22

Sample Edition

by Westie

Beyond the ATOM 2.0 announcement, whose white paper we outlined on Twitter yesterday, there have been plenty of other Cosmos related announcements at Cosmoverse this week. The biggest one yet was announced yesterday: Circle will be creating their own app-chain on Cosmos for native USDC deployment, available for any IBC chain. They will also be utilizing the Cosmos Hub for Interchain Security, and the Interchain Scheduler for cross-chain MEV opportunities (which has me pretty interested). 

Crypto markets had a very slight rally over the past 24 hours, with BTC and ETH up 0.38% and 0.89%, respectively, but there is still heavy volatility in between the range of $18,500 and $19,500, so these numbers could be completely wrong by the time this hits your inbox. This small rally is on the back of the 10Y bond yields and DXY finally deciding to have a leg down for the first time in weeks.

 

Beyond the ATOM 2.0 announcement, whose white paper we outlined on Twitter yesterday, there have been plenty of other Cosmos related announcements at Cosmoverse this week. The biggest one yet was announced yesterday: Circle will be creating their own app-chain on Cosmos for native USDC deployment, available for any IBC chain. They will also be utilizing the Cosmos Hub for Interchain Security, and the Interchain Scheduler for cross-chain MEV opportunities (which has me pretty interested). 

 

There was also a clever algorithmic trading strategy designed by an MEV bot around GMX unstaking that was discovered on-chain yesterday. They basically figured out that there was a high probability that anyone who unstaked their GMX would be selling their tokens almost immediately after, especially the longer amount of time staked. Therefore, they set up a bot that could frontrun that sale and buy back immediately after, and has so far been pretty profitable amassing 55 more GMX (~$2,200) in 45 days on only small trades. 

 

– Westie

This chart plots revenue versus total USD value token emissions of major DeFi lending protocols. This is meant to represent tokens as customer acquisition costs and show that in most cases these protocols are spending far more than they bring in. However, this is somewhat misleading, as the USD value of token emissions is decided by the market and not the protocol, which often sets a fixed number of tokens to be given out in emissions. Therefore, just because the market decides a certain token is worth a lot more than another doesn’t necessarily mean that they are “spending” more. However, maybe protocols need to start using emissions based on the oracle price of their token in USD and not a fixed number. 


This also shows the power of lending protocols having a protocol specific stablecoin. Because Maker is the lender themselves and not just the platform for other lenders, they don’t need to waste token emissions to incentivize that liquidity.

Today’s price action was pretty flat for most tokens, except LINK, which took a big hit despite announcing a partnership with SWIFT yesterday. ATOM continues to struggle from a “sell the news” event, especially because the ATOM 2.0 white paper outlines heavily increased inflation for 36 months until the disinflationary aspects kick in. 

Take a look at the mechanics and tokenomics behind two protocols offering perpetual leveraged exposure to crypto assets: Mycelium and Gains Network.

Given the level of integration between Curve and Frax, the risk posed by the core team multisig to the Curve protocol must be assessed.

Blockchain development agency Labrys said Ethereum censorship has grown “unchecked” since the Merge, but core developers disagree

Do Kwon and Terraform Labs didn’t break the law as LUNA has never been a security, a spokesman reportedly said

The insights, views and outlooks presented in the report are not to be taken as financial advice.  Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.

133 W 19th St, New York, NY, 10011

Decoding crypto and the markets. Daily, with Byron Gilliam.

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Kinetiq has established itself as Hyperliquid's dominant liquid staking protocol, holding 82.5% of LST market share with $610M in TVL. The protocol is now expanding beyond its kHYPE staking core into higher take-rate verticals: iHYPE for institutional custody rails, Launch for HIP-3 capital formation, and Markets for builder-deployed perpetuals. We view Markets, launching Jan. 12, as the highest-potential product line given its mechanically scalable, activity-linked unit economics. Near-term revenue remains anchored by kHYPE's KIP-2 fee schedule (~$1.6M annualized), while Markets provides embedded optionality if HIP-3 economics normalize post-Growth Mode. KNTQ's setup is relatively clean: zero insider unlocks until November 2026, 6.2% buyback yield from staking revenue, and cleared airdrop overhang. Risks center on unproven Markets execution, declining kHYPE TVL despite ongoing incentives, and competition from Hyperliquid's native initiatives.

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