AB Research Letter May '24
Try everything until something works
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. MAY ‘24 includes:
May 2024 Subjects:
Capturing Attention: Memecoins
Multidimensional Gas Pricing on Ethereum
Gaming Onchain - Illuvium: Open Beta Launch
Macro Update: Outside Crypto
AB Fund Portfolio: Holdings + Additional Alpha
Capturing Attention: Memecoins
The concept of value is easy - whatever someone wants has value, regardless of the reason
The emerging world loves memes. In the future, we believe ‘memecoins’ will just be called ‘memes’. A simplification of the crypto aspect, yet an overall increase of depth to the concept of memes. Memes are evolving from JPEGs to full fledged brands - a powerful paradigm shift to pay attention to.
Recently a new meme was created called $JAAD. Despite being on our 100x radar, let’s dive into this new brand to test our evolving meme theory.
JAAD stands for “Just An Average Degen” and lives on the newfound Degen L3, made possible by Base. Beyond a few laughs and a unique new tipping mechanism, I view $JAAD as a crypto native attempt to create a successful lifestyle brand like Friday Beers.
What does Friday Beers sell? Experiences and T shirts. How do they do that? They capture your attention via videos, tweets, events, etc. Everything works well because they have your attention. Capture attention, sell products.
“That was the Web 2.0 method. It started with Justin Bieber. He went viral in 2008 via Youtube. That became the meta for the next decade. ‘Hack’ the algorithm and go viral.” - Good Game Podcast
But what about Bieber’s early listeners? Those who believed in him first, and supported him early on? How did they benefit from his massive valuation increase? Hint - they didn't. Instead they were mined for data in exchange for free products.
Discovering valuable entertainment at early stages of its lifecycle often leads to nothing but bragging rights. In a pretty interesting way, memecoins help solve this.
Memecoins make everyone a capitalist. These new entertainment x financial vehicle hybrids offer early users the opportunity for upside and enlist them to help capture other peoples attention. These new brands aggressively compete for attention because most of the audience & supporters are stakeholders as well. A new paradigm for attention gathering compared to the traditional free products in Web 2.0.
Another anecdote: QW recently met with a Web2 betting executive who said they believe sports gambling is losing market share to memecoins Which makes sense because in sports betting the odds are literally -EV. In memecoins the upside is higher and at least you feel like there is a fair shot.
More validation, $JAAD recently won a grant of 250K $degen from Deploy on Degen Week, by Syndicate. To me it is obvious, they see the value of capturing people's attention. There are many ways to monetize once people are paying attention, but the hardest part is getting it in the first place. The famous saying, "All publicity is good publicity" came from somewhere.
For perspective, Friday Beers is a multi million dollar company that started as an inside joke on twitter.
$Jaad is a memecoin that started as a joke on Degen L3.
I'm excited to see where this project goes!
Timestamp this:
$JAAD Warpcast followers: 1.3K
$JAAD Market Cap: $67K
Author: @whitetail
Multidimensional Gas Pricing on Ethereum
Before EIP-4844, Ethereum gas fees operated in a predictable manner comparable to the salary of public workers, like firefighter or police officers. These public servants get paid a predictable salary no matter what their day may have in store, ranging from low to extremely high workload. Prior to EIP-4844, every type of transaction a user submitted to Ethereum had a gas fee that was static and predictable. Meaning it was a one size fits all for things like raw computation, using Ethereum storage, data bandwidth, and cost of generating proofs.
With the addition of EIP-1559 (ETH burn) and EIP4844 (blob fee market), gas costs on Ethereum are fairly cheap. Is that a good thing? Yes and no.
Low gas price is good for the everyday users to transact on mainnet without having to pay some hefty fee for doing an ordinary transaction like sending ETH to another wallet or paying for something using USDC.
On the other hand, not all transactions on Ethereum are equal. Some require the operating system (the global node set) to store more information for long periods of time increasing the overall state growth and overtime increasing expense to validators/node operators.
Using multidimensional fee structures, Ethereum can make certain actions inside of a transaction cost more/less than others based on their overall effect to the network. In essence this will make storing data for longer periods of time more expensive as the transactor only pays for that one time.
Vitalik discusses in his latest blog post how in the future things like stateless clients and state size growth are going to force the community to decide how to handle multidimensional gas. Vitalik highlights two solutions he sees; per-transaction max: the weaker-but-easier way to get multidimensional gas and multidimensional EIP1559: the harder-but-ideal strategy. You can read more in-depth in the post.
Author: @L2explorer
Gaming onchain - Illuvium: Open Beta Launch
After three years of development, the highly anticipated game Illuvium is set to enter the open beta phase in July. The upcoming open beta will showcase a polished version of the game integrated with blockchain features, with continuous updates planned post-launch. A sneak peek into the beta launched on May 1 reveals the addition of ‘Illuvials’—creatures akin to Pokémon—roaming the expansive Illuvium universe.
Players can engage with these Illuvials, hunting and capturing them as they traverse the visually stunning game world.
The current beta phase is running on Ethereum’s testnet, allowing the players to rigorously test and secure the game’s smart contracts. Two other major features are set to enhance the Illuvium experience in the coming months, promising to solidify its status as a top-tier game within the crypto space. The first is direct Illuvial combat, where players can engage in battles with Illuvials that will actively fight back. The second exciting addition is the Gauntlet mode, an arena-style competition akin to Team Fight Tactics, where players will compete in a round-robin format against others. With its combination of sustainable NFT economics and AAA-quality gameplay, Illuvium is poised to be the breakout star in the blockchain gaming arena.
Author: @Duke
Macro Update: Outside of Crypto
The last several weeks have been a classic tug of war between the bears and bulls. Total crypto market cap continues to range between $2.3 and $2.6 trillion as bitcoin and ethereum struggle to push for new all-time highs. As of May 15th, The Bureau of Labor Statistics reported the latest CPI numbers for April and markets have reacted positively. Inflation rose 0.3% from March, slightly beating estimates of a 0.4%. Seems like a small win, so why all the excitement? In simple terms, if inflation continues to gradually fall and the Fed senses weakness in the labor market (rising unemployment), they will cut rates and ultimately back off of the aggressive tightening policy that began back in March 2022. Basically, Lower rates = More borrowing = More money to invest. The news sparked a strong rally across all major stock indices as well as crypto assets pushing BTC and ETH as high as $66,000 and $3,000 respectively. On a trailing twelve-month basis inflation remained in line with expectations of 3.4%, but still significantly above the Fed’s stated 2% target rate.
In other news, increased mainstream adoption of crypto has forced the hand of U.S Legislators to address the elephant in the room: Regulation. While the SEC continues to throw the kitchen sink at legitimate companies in the industry (with arguably no basis and continued L’s in court), members of the U.S House of Representatives are preparing to vote on the newly created Financial Innovation and Technology for the 21st Century (FIT21) Act later this month. The bill aims to dial in on consumer protections and the regulatory certainty necessary to allow the digital asset ecosystem to flourish in the United States.
In addition, forming clear regulatory boundaries between SEC and the Commodity Futures Trading Commission (CFTC) concerning digital assets, granting new jurisdictional powers to the CFTC over digital commodities, and specifying the SEC’s oversight over assets offered as part of investment contracts. The topic of crypto currency regulation has driven a clear wedge between members of congress and is likely to become one of the most important discussions for the upcoming 2024 elections. Trump recently talked about how he would allow crypto. Paul Ryan compared stablecoins to eurodollars, very well educated on the topic. State of Wisconsin just bought BTC. Game theory is playing out. At some point it is a risk to NOT own crypto.
Author: @8ball
Our Portfolio + Additional Alpha
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 !!
Our Portfolio
In 2024 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
Watchlist
Author: @Rocketpilot
Additional Alpha
Morgan Housel on debt
Howard Marks on debt
Nic Carter on stablecoins
Brookings Institute comparing stablecoins to eurodollars
