Crypto to the moon, Boomers love magic internet money, Uniswap the unicorn token swapping app

Happy Sunday Friends —

This week’s edition of Internet Capital:

1. Markets 🌝 - Crypto to the moon? Crypto to the moon.

2. Why Boomers Love Magic Internet Money 💵 - thinking about why big/old money changed their stance on crypto.

3. Uniswap 🦄 - understanding a key piece of crypto infrastructure.

Markets

We usually look at weekly price returns, but because of crypto’s parabolic rise over the last few weeks, let’s check out returns since February 1st.

• BTC - the big orange coin posted a 46.32% since the beginning of February, and achieved its highest-ever monthly close at $61,179. Bitcoin is now within reach of its absolute all-time high of ~$69,000.

• ETH - the second biggest crypto followed Bitcoin’s lead with 50.15% gain. BlackRock and other large asset managers have already filed for ETH ETFs, fueling bets on the token.

• COIN - like the actual coins, COIN has mooned. Coinbase' stock appreciated by 59.2%. Investors are betting that COIN will continue to benefit from the progressive institutionalization of the industry.

• SOL - Solana’s token recorded a relatively modest gain of 33.15%. While attention has migrated elsewhere after SOL’s rise from the ashes earlier this year, many traders (including SBF) believe the Ethereum competitor is poised for another move.

• WIF - some are calling dogwifhat coin the next dogecoin. It exploded for a 242% gain over just last week, putting the newest meme coin up 541.8% since February 1st.

• RNDR - AI x Crypto has been a core theme in the industry over the last few months. The Render Network, a decentralized GPU rendering platform, has been one of the biggest beneficiaries to date with a 78% gain.

Why Boomers Love Magic Internet Money

Crypto turbo mooning again is probably a surprise to many people. “I thought crypto was dead", “Didn’t Sam Bankman lose everyone’s money?”, “Isn’t it all a Ponzi?”.

Like many topics, simply accepting popular opinions of crypto over the last few years was misleading. It’s true crypto prices experienced a spectacularly catastrophic fall on the heels of a series of meltdowns. But mainstream sources grossly misrepresented the reasons for and extent of these failures.

In fact, there were always logical reasons why someone might want to hold crypto. It was never just gambling, degeneracy, and speculating on nonsense (although this is part of it). I believe that “smart money” has understood this for years, and has simply been waiting for an opportune moment to act.

FTX’s 2022 implosion, the ensuing collapse of centralized crypto companies, regulatory hostility and a monetary tightening cycle was the perfect storm for creating such a moment. The mania had run its course, and a cleansing was due.

And what happened after the bad actors were purged and prices had plunged? Blackrock filed their application for the spot BTC ETF of course - June 16, 2023 to be exact.

But this isn’t the kind of thing done on a whim. Official applications consist of a comprehensive overview of the proposed product - design specifications, investment objectives and risks, operational procedures for managing the product, etc. Not to mention all of Blackrock’s internal research and diligence checks.

This means that Blackrock was planning to offer crypto products well in advance of 2023 and was not swayed by the 2022 crash. 

Understand that Blackrock is the smartest money there is. They’re not going to waste their time with something that no one wants or is fundamentally valueless. They believe that crypto is here to stay, and (obviously) must have reasons for believing it.

So, what made Blackrock want to offer crypto products even after all of its bad press? How are they benefitting? And why do the boomers seem to love magic internet money all of a sudden?

It all starts with the asset management firms (like Blackrock). It’s simple - crypto is another asset that they can package up into a product, sell to people, and make more money on. Their business model is to charge a fee on assets under management (AUM), so when AUM increases so do profits.

For Blackrock to build AUM from crypto, there has to be demand for their crypto products. Somehow they have to convince their boomer financial advisor and money manager friends to want crypto. Seemingly not an easy task considering that this group of people has been generally anti-crypto for years.

But let’s think about the incentives here. Professionals wouldn’t invest in the asset class because it was hard to access and wasn’t deemed legitimate. And no demand means no supply - why would asset management firms offer crypto products if no one wants them? Something needed to spark the demand-supply cycle.

Blackrock realized that they could solve both problems in one move and guarantee millions in profits. As the world’s largest, most respected asset management firm, what Blackrock says is the rule. If they declare crypto legitimate then it’s legitimate in the eyes of traditional finance. End of story.

And providing access to financial products is Blackrock’s specialty! They know how to create, market, and manage financial products. They have massive distribution so investments they offer are extremely accessible.

So by creating and marketing a Bitcoin ETF, Blackrock singlehandedly solved the only two impediments that were preventing boomers from investing in crypto - legitimacy and accessibility.

If you see the mainstream (boomer) narratives about crypto changing, this is why. Big/old money is positioned and can benefit from crypto’s upside now. The boomers finally have an easy way to access a high-growth, establishment-approved, money printer-resistant asset class. Of course they’re going to like it.

My conclusion? The writing is on the wall. It was always inevitable to some extent, but now that the big players have their piece, the crypto transition is full steam ahead.

App of the Week: Uniswap

Indeed, the Uniswap name derives from the words “Unicorn” and “Swap”. Its mascot is a unicorn, and the app lets users swap between crypto tokens.

What is it?

Uniswap is a decentralized exchange (DEX) that allows users to swap between different crypto tokens without going through an intermediary. Think of a stock exchange for tokens, but it’s globally accessible, open 24/7/365, and operated through self-enforcing code instead of legal contracts.

How does it work?

• A class of users called liquidity providers (LPs) deposit tokens into Uniswap’s pools. The deposited tokens (liquidity) allow other users to exchange one token for another in an automated way.

• Each token exchange (swap) made through a Uniswap pool charges a fee to the swapper. This fee is distributed proportionally to the pool’s liquidity providers.

• The rules governing Uniswap pools are defined in self-enforcing smart contract code so that no one can break the rules or steal anyone’s tokens.

Why does it matter?

Exchanges are a key piece of infrastructure for financial markets. They provide a venue for assets to be traded and prices to be determined. While traditional exchanges are secured by regulations and laws honed over many years, they aren’t suited for crypto.

Simply put, global, 24/7/365 internet money needs global, 24/7/365 exchanges. DEXs like Uniswap provide this service and allow token holders to play a role in its operations (by providing liquidity) and benefit from its success.

As the 6th largest decentralized finance app in the world, understanding Uniswap is one of the first steps a newcomer should take to better understand crypto. Learn more here.

Other News

• Blast - the newest Ethereum L2 has attracted over $2 billion in speculative capital. With a confirmed airdrop in May, users are vying for

• Meme SZN - meme coins were on an absolute tear over the last week. According to Coingecko, we now have 3 meme coins with +$1 billion valuations. Blackrock meme ETFsoon?

• Worldcoin - if you didn’t know, OpenAI CEO Sam Altman has a crypto project called Worldcoin. While the project is intended to provide a privacy-preserving human identity and financial network, people are using it as an OpenAI / Sam proxy bet… interesting behavior.

• Restaking Mania - restaking is one of the hottest topics in crypto - using ETH staked on the Ethereum network to secure other decentralized crypto services. To get an idea of the trend’s significance: Eigenlayer, Ethereum’s largest restaking provider, has attracted over $10 billion in just a few months and raised $100 million from top VCs.

Take of the Week

Of course, some parts of crypto are still absolute nonsense. Just the other week a crypto influencer called Bitboy won an amateur fight against a guy who created a coin called HarryPotterObamaSonic10Inu and it was the talk of the industry. Can’t make this stuff up folks.

Questions

Crypto is hard, especially when you’re first starting out. If you have any specific questions you want answered let us know!

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