AB updates are for informational purposes only. Do not construe any of the following as investment, financial, or other advice. You make your own decisions.
The AB Research Letter is a culmination of research & insights from the diverse capacity of the AB Team. Ultimately our focus & mission is financial freedom.
June 2024 Subjects:
Creating a Plan: Know Your Situation
Institutional Interest: Tokenization & Price Targets
Bitcoin L2s: Starknet & Beyond
Research Hub Interview
AB Fund Portfolio: Holdings
Additional Alpha
Creating a Plan: Know Your Situation
As the market chops around, this is a great time to formulate a plan for the second half of this bull market. Everyone’s plan will be different. If you’re a 18 year old degen you might be fine rotating profits into another memecoin chasing the $10K to $1M challenge, only three 10x’s to go!
If you have a spouse and kids, maybe it makes sense to take some money out at a more conservative number and pay off the mortgage. If you’re like most of the people at Advantage Blockchain, we measure our net worth in ETH / BTC so our goal is always to end each cycle with a larger stack of the majors. Only you know your situation so act accordingly. We view the 2H 2024 as a time to lock in. It will get frothy.
In December 2020 when Bitcoin surpassed it’s previous ATH of ~$20K, it peaked 11 months later in November 2021 at ~$69K (~3.5x higher). It was not a clean path upwards but 3.5x MOIC (multiple on invested capital) in 11 months is a pretty damn good investment (coming from a tradfi guy). This cycle, Bitcoin breached it’s previous all time highs in March 2024, so looking at the same timeline, that would mean February 2025 = November 2021.
Additional point to note, post November 21 top, investors thought the previous cycle highs (~$20K BTC and ~$1,500 ETH) would hold as strong support. Since this was the consensus view, other market participants came into the market and took advantage of it to shake people out at the bottom (~$15K BTC and ~$900 ETH). Be careful on the downside this cycle because the same ETFs that are driving strong flows into the majors, also can be used to short them on the way down. Double edged sword.
History doesn't repeat itself, but it often rhymes - Mark Twain
Each cycle is different. There have been changes in market structures (ETFs) and most effective tactics available (META). From our leet trading experience, it’s a lot easier to build a plan that you can prepare and execute on rather than trying to react in the hype of the bull market. Think about your own situation now before stuff gets crazy. Have price levels in mind to avoid getting caught up in the hype when people start increasing price targets.
Do your own research, make a plan, and stick to it. Last cycle it was Su Zhu calling for $10K ETH when ETH was already $4K (40x off the $100 bottom). Don’t be someone else’s exit liquidity.
Author: @Whitetail
Institutional Interest: Tokenization & Price Targets
Fidelity recently tokenized a money market fund on Onyx, JP Morgan’s Ethereum based private blockchain network. Tokenization is the digitization of equity or debt on a blockchain. In this case, Fidelity issued shares of a money market fund as digital representations on the Onyx blockchain. The goal of tokenizing the money market fund is to use it as collateral, bridging the gap between DeFi and institutional capital. Additionally, Fidelity has cited improving efficiencies and reducing costs in financial transactions as benefits.
“Tokenizing our money market fund shares to use as collateral is an important and natural first step in scaling our adoption of this technology. The benefits to our clients and the wider financial system are clear; in particular, the improved efficiency in delivering margin requirements and reduction in transaction costs and operational risk. The tokenization of this fund is a big step towards settlement for institutions into DeFi and could open up the floodgates for capital to flow into Ethereum based assets.” - Stephen Whyman, Fidelity International's Head of Debt Capital Markets
VanEck, an investment management company with $90B AUM, has revised its May 2023 prediction of $12K ETH by 2030 to $22K! This decision was a direct result of the ETH ETF approval and the improving scale of the Ethereum network (we called that).
“Driven by a strong value proposition to entrepreneurs, the Ethereum network is likely to continue its rapid market share growth from traditional financial market participants and, increasingly, Big Tech,” VanEck says. “Should it do so while maintaining its dominant position among smart contract platforms, we see a credible path to $66B in free cash flow to token holders supporting a $2.2T asset, or $22K per coin, by 2030.”
VanEck is not the only institution betting big on Ethereum as BlackRock, Fidelity, Franklin Templeton, Grayscale, ARK, and Invesco Galaxy have also applied for Spot ETH ETFs. Fortune 500 companies are moving onchain. It is impossible to ignore that Coinbase has used Base to cut out middlemen and increase capital efficiency while producing revenue with 99% margins.
Bullish yet?
Author: @Alec Beckman
Bitcoin L2s: Starknet & Beyond
For those who don’t know much about Starknet, it is a layer 2 zero knowledge (zk) rollup secured by Ethereum. Starknet was built by the Starkware team using “STARK” proofs.
Starknet has been live for over a year and in early 2024, STRK (Starknet’s token) became available to the general public allowing it to be used for gas fees and in the future as a staking token. Post EIP4844, gas fees on Starknet have been sub $0.01 with high TPS capabilities.
However, demand to transact on their chain has been low compared to other layer 2 chains like Base. This is due to a variety of reasons including the fact that Starkware uses a programming language called Cairo instead of Solidity (Ethereum’s main coding language). This requires a heavier lift to port over dApps from other layer 2s or Ethereum.
Jumping to the present, Starkware recently announced their initiative of laying the groundwork to scale both Ethereum and Bitcoin simultaneously. For this to work, the Starknet technology requires a Bitcoin upgrade. Once that happens, Starkware will be able to upgrade the layer 2 within 6 months of that Bitcoin upgrade taking advantage of OP_CAT.
OP_CAT allows the implementation of a STARK verifier in Bitcoin Script which opens a path to move safely and with self-custody between Bitcoin and Starknet creating a single Layer 2 for both Ethereum and Bitcoin. By including OP_CAT in the Bitcoin code via a soft fork, the future of Bitcoin will have privacy through STARKs and improved user experience.
For a bit more in-depth reasoning on why OP_CAT, here is an excerpt from the Starkware team:
“STARKs require verifying chains of hashes, and little else. Their primary verification loop consists of simple algebraic operations (addition and multiplication modulo a small prime number) and verifying that entries pre-committed via Merkle trees are opened correctly. OP_CAT uniquely enables creating and opening entries in Merkle trees within Bitcoin Script, because the core operation enabling Merkle tree creation and verification is composed of concatenating two values, then hashing them (OP_CAT enables concatenation). While other covenant-enabling op codes may be more powerful, OP_CAT is the only one currently under debate that enables Merkle tree verification.”
Author: @L2explorer
Research Hub Interview
Advantage Blockchain’s CEO, Marc Paquin, interviews Brian Armstrong’s second start up, Research Hub co-founders Jeffrey Koury and Riccardo Goldoni. Listen to them give an in depth overview and deep dive of the platform.
Author: @rocketpilot
Our Portfolio
Disclaimer: Our buys/watchlist should not be takin as financial advice/investment suggestion. We share this information in the nature of education & transparency. We value the ability for our network to be aware of new projects & ecosystems we’re actively researching, participating & investing in. Always invest responsibly. And remember… Fundamentals > Pumpamentals !!
We strive to continue helping as many people as possible understand more about the blockchain ecosystem. A large part of this, is investing. Against traditional norms of gatekeeping trading strategy or portfolio positions, Advantage Blockchain seeks to help the world understand our approach to investing granted our intensive research / interactive background. In the name of transparency, we share AB Fund’s current portfolio each AB Research Letter update. This is not investment advice, but a look into our strategy for educational purposes only.
Recent Buys
Degen ($DEGEN) @ $0.018
Aerodrome ($AERO) @ $1.07
Velodrome ($VELO) @ $0.14
Additional Alpha
Throughout the month, the AB Research team gathers and curates a list of high quality resources for readers to continue learning outside of the content we produce. Crypto is open source, the alpha is out there. We’re here to help you find it.
AB updates are for informational purposes only. Do not construe any of the following as investment, financial, or other advice. You make your own decisions.