gm friends —

HBO claims to have identified Bitcoin’s creator in a new documentary. Polymarket bettors are putting their money on Len Sassman.

The documentary drops tomorrow, so stay tuned for the outcome. On that note, let’s get into it - today’s sections will give you a good feel for crypto’s current market conditions:

• 👀 Markets: September Recap & End of Year Outlook

• 💰 Internet Capital’s Crypto Sectors

• ⚗️ Synthetix: Liquidity for Crypto Derivatives

Check out this week’s YouTube show if you missed it!

Want to be a better crypto investor? Subscribe, follow us on X, and check out our YouTube Channel to never miss an update - thanks for reading!

Markets: September Recap & End of Year Outlook

Early September saw renewed optimism in crypto markets, driven by macroeconomic factors like the Fed’s rate cuts and China’s stimulus. Bitcoin led the charge, rising 7.7%, while Ethereum lagged with a 3.2% increase due to concerns over market share loss and declining fee generation.

Bitcoin dominance also hit a four-year high at 59%, though it slightly pulled back toward month’s end.

Layer-1 blockchains also showed strength, with Solana (+14%), Aptos (+23%), and Sui (+118%) leading the pack in September. Ethereum recaptured market share as Layer-2 blockchains reduced their reliance on Ethereum’s blockspace after EIP-4844 was implemented.

Stablecoins continued to gain traction, with new announcements from Sony Bank, Revolut, and BlackRock, driving growth in the stablecoin market to $172.5 billion in total capitalization.

However, market sentiment took a hit in early October, reacting poorly to hawkish comments from Fed Chair Jerome Powell and misreporting on X about FTX liquidations.

The Fed’s policy outlook remains unclear, with potential cuts still expected through the end of 2024.

Meanwhile, geopolitical tensions in the Middle East further weighed on risk assets, including crypto, which sold off alongside equities as gold surged.

Despite this, there are positive signs on the horizon. Ethereum saw increased Layer-2 activity, driving transaction fees higher, and altcoins like Solana and Sui continued to attract interest. As the U.S. elections approach, regulatory clarity may also provide a more favorable environment for crypto heading into 2024.

Sources:

• Weekly: Mixed Messages [Coinbase]

• VanEck Crypto Monthly Recap for September 2024 [VanEck]

Internet Capital’s Crypto Sectors

Weekly Sector Winner: Majors (-8.2%)

• There are no real “winners” when markets tank. Per usual, majors went down the least when the markets tanked on heightened geopolitical tensions

• Ethereum and Solana both lost around 9.5% with Bitcoin weathering the storm a bit better, with a 5.8% weekly drawdown

Weekly Sector Loser: L2 (-13.8%)

• L2 tokens remain highly correlated and all continue to get crushed. Polygon’s POL token fared the best this week with a relatively mild 10% loss. The remainder of the tokens painted a -15% weekly candle - yikes

• Despite their poor performance, I remain optimistic. I believe that L2 teams will begin to experiment with tokenomics to improve their tokens’ utility

Synthetix: Liquidity for Crypto Derivatives

What is it?

Synthetix is a decentralized liquidity provisioning protocol built on Ethereum and Optimism, designed to power a range of synthetic assets and financial instruments.

Synthetix allows stakers to lock up their native token, SNX, as collateral to mint synthetic assets (Synths), which track the value of real-world assets like cryptocurrencies, commodities, and fiat currencies. This pooled collateral model enables instant liquidity with minimal slippage, solving key issues found in decentralized exchanges.

The protocol serves as a backend liquidity layer for other DeFi platforms to build on, offering deep liquidity and enabling advanced products like perpetual futures. Synthetix’s innovative approach eliminates the need for traditional order books by using oracles to price assets, making it highly efficient for on-chain derivatives trading.

How does it work?

🔗 Collateralized by SNX: Stakers provide liquidity by locking SNX tokens, which back the issuance of synthetic assets (Synths) like sUSD, sBTC, and sETH. This liquidity underwrites the entire protocol, supporting the trading of these synthetic assets and decentralized perpetual futures.

⚖️ No Order Books Needed: Instead of relying on traditional order books, Synthetix uses a peer-to-contract (P2C) system where all trades are conducted directly with the smart contract. Oracles feed real-time prices, ensuring accurate and fair value without needing counterparties.

💰 Staking and Rewards: Stakers earn rewards from trading fees, which are generated by users exchanging synthetic assets. These rewards are paid in Synths, providing an incentive for stakers to maintain the protocol's liquidity. Stakers must manage their Collateralization Ratio (C-Ratio) to keep the system balanced and avoid liquidation.

🔄 Spot Synths & Perpetual Futures: Synthetix supports both spot Synths and decentralized perpetual futures. Spot Synths track the price of various assets, while Perps allow traders to gain long and short exposure without holding the underlying assets. Perp liquidity is drawn from the Synthetix debt pool, making trades efficient and fee-minimized.

How can you use it?

1. Staking SNX: Stake your SNX tokens to mint Synths, contribute liquidity to the protocol, and earn rewards from trading fees.

2. Trade Synthetic Assets: Use Synthetix-powered platforms like Kwenta or Lyra to trade a variety of synthetic assets with minimal slippage and deep liquidity.

3. Perpetual Futures: Gain leveraged exposure to assets like Bitcoin or Ethereum through Synthetix’s decentralized Perps market, backed by the protocol’s liquidity.

4. Participate in Governance: As an SNX staker, you can influence protocol decisions through the Synthetix Governance Module, which operates via a staker-elected council system.

For more details, visit the official Synthetix documentation.

Other News

• Satoshi Nakamoto Unmasked? New Documentary Claims to Reveal ‘Bitcoin Mystery’ [Decrypt]

• Bitwise Plans ETF Merger, Aims to Launch Momentum-Based Bitcoin and Ether Fund [Bitcoin.com]

• SEC, DOJ Back Class Action Against Nvidia Over Alleged Hidden Crypto Revenue [Decrypt]

• BBVA to Launch Visa-Backed Euro-Pegged Stablecoin Next Year [Bitcoin.com]

Thanks for reading!

Don’t want to fall behind in crypto? Subscribe, follow us on X and check out our YouTube Channel to never miss an update!

Nothing in this newsletter is meant to be taken as legal, tax, investing, or other advice. Internet Capital is for educational and entertainment purposes only. All views are our own, and not representative of any organizations with which we are affiliated. For any business partnerships please reach out via the email [email protected]