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April 4, 2023

🥛 The Rise of DEXs 📊

GM. This is Milk Road – the daily newsletter that’s so entertaining, you’ll forget you’re actually learning something. We’re like Sports Science but for crypto.

Here’s what we’re serving up today:

  • The Rise of the DEXs 📊

  • The Stablecoin War heats up 🔥

  • Your guide to zkEVM 📖

  • Twitter changed its logo to Dogecoin 🐕

Prices as of 9:00am ET

Today’s edition is brought to you by Valenspay, an all-in-one fintech platform for individuals and businesses. 

THE RISE OF THE DEXS  📊

Decentralized exchanges are boomin’. Trading volume across all DEXs has surged more than 167% since December, reaching a total of $131.2B last month.

But there’s one exchange that’s moving quicker than the rest. It’s the Usain Bolt of DEXs…

Uniswap. And it just had its best month since January 2022, with a whopping $71.6B in trading volume.

The craziest part? It’s the second straight month Uniswap has seen more volume than Coinbase. *queue Back to Back by Drake*

Why is the DEX market doing so well? Investors are spooked by regulators coming after CEXs. Over the last months, regulators have:

So yeah, people are catching onto the fact that there’s no safe CEX in crypto.

So wait, how exactly are DEXs different? They use smart contracts to automatically execute trades between users. No intermediaries = fewer costs = cheaper for you.

You also get to hold your own crypto. Remember kids: Not your keys, not your cheese.

And most notably, they don’t handle fiat currencies and aren’t on/off-ramps for the industry. That’s kept regulators more at bay…for now.

No wonder everyone has that DEX fever now…

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THE STABLECOIN WAR HEATS UP 🔥

Ladies & gents, the Stablecoin War is heating up again. Over the years many stablecoins have emerged, but most have failed. (Turns out they’re just as stable as the Milk Man after his third cup of coffee.)

But there are 2 stablecoins that have survived: USDT & USDC. It’s been crypto’s version of King Kong v Godzilla.

Well, over the last 3 weeks:

  • USDT has seen $9B in inflows and now makes up over 60% of the stablecoin market

  • USDC has seen $10B in outflows and its market cap has plummeted 23%

Source: CoinMarketCap

So what’s going on? USDC’s troubles began when SVB was on the brink of collapsing and everyone found out it had $3B+ stuck in the bank (~8% of its total backing).

It caused a panic within the crypto community and USDC depegged from $1 –> $0.90. Suddenly, its future was more unpredictable than the first round of March Madness.

Why does this matter? USDT has (ironically) become the stablecoin most people trust.

The prior concerns around USDT have been centered around the lack of transparency into its reserves and the fact that it is not registered in the U.S.

On the other hand, USDC was praised for its transparency with asset holdings and backing from Circle – one of the better known companies in the space. It seems the cost of doing crypto business within the States has begun to outweigh the risks of operating elsewhere.

How the tables have turned…

We’ll be keeping a close eye on the Stablecoin Wars and if USDC can make a comeback.

YOUR GUIDE TO ZKEVM 📖

Let’s talk about crypto’s new favorite buzzword: zkEVM. And no, that’s not a blockchain-based EDM group…

It’s the latest upgrade to zk-Rollups, an Ethereum Layer 2 solution. zkEVMs launched just this week, and they’re about to make zk-Rollups the coolest thing since sliced bread.

But first, let’s take a quick step back – right now there are two main types of Layer 2s: Optimistic and zk-Rollups. That’s right, only chocolate or vanilla right now.

Both help lower fees by processing transactions off the Ethereum network. The transaction data is still stored on-chain though.

Optimistic: rolls up a bunch of transactions into a cluster to process off the main Ethereum chain to save time & money. The big thing about Optimistic rollups is that they assume all the transactions are valid. This is what makes them fast.

zk-Rollups: also rolls up a bunch of transactions into a cluster, but there’s one big difference: they validate all the transactions before. This makes it more secure.

So far, Optimism rollups have been the crowd favorite, with ~$8B in total value locked vs. just $700M on zk-Rollups.

But this could change with the launch of zkEVMs. They will make launching apps and getting users onto zk-Rollups much easier.

Check out the rest of zk-EVM 101 on the Milk Road website! Including the lowdown on an expected zk-Rollup airdrop. Who doesn’t like free money…

BITE-SIZED COOKIES 🍪 

Twitter changed its logo to the Dogecoin mascot. $DOGE jumped ~20% in the first hour after the change.

Binance has been hit with a $1B lawsuit. Binance’s CEO (CZ) and other celebrities like Jimmy Butler are also being sued for promoting unregistered securities.

OKX launches its first immersive metaverse fan experience with professional soccer player, Ruben Dias. Fans can follow some of Rúben Días’ favorite training techniques and coaching/performance tips in the OKX Collective metaverse.

A group of MEV were exploited for $25M. Ouch…. Another day, another hack.

MILKY MEMES 🤣

That’s a wrap for today. Meet us on Twitter to talk all about it. It’s kinda like a family BBQ but better – no screaming kids, awkward photos, or drunk uncles telling weird stories (@MilkRoadDaily)

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.