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GM. This is Milk Road, the daily newsletter that yields insights, laughs, and “oooh, I get it!” moments.
Here’s what we got for you today:
- ✍️ How we’re taking profits this cycle
- ✍️ Are NFTs about to make a comeback?
- 🎙️ The Milk Road Show: Your Crypto Isn't Safe! w/ Ian Rogers, Ledger CXO
- 🍪 We’re on the hunt for a Crypto Researcher and Analyst for Milk Road PRO – apply here!
Prices as of 2:00PM ET. Click here for our Fear & Greed Index
HOW WE’RE TAKING PROFITS THIS CYCLE 💵
This cycle we’ll be taking profits in Ethena’s high-yield $USDe, and Maker’s $DAI stablecoins.
That last choice probably won’t surprise you (we’ve been very vocal about our love for Maker), but the choice to go with $USDe might give you pause...
‘Cause the high-yield (20%+) stablecoin of last cycle was Terra Luna’s $UST.
…and that famously went belly up, kickstarting the previous bear market.
(Hint: stablecoins aren’t meant to do this 👇).
But while $USDe may seem similar on the surface, it operates very differently under the hood.
Terra Luna’s ‘stable’ coin worked like this:
1 $UST would always be redeemable for $1 worth of $LUNA.
If the price of $UST fell below $1 (say 90 cents) traders would be incentivized to buy 1 $UST for less than a dollar and swap that for $1 worth of Luna tokens, then sell that for $1 and lock in an instant profit of 10 cents (or 10%).
Keeping the whole thing stable…in theory.
Problem was: if the price of both $UST and $LUNA cratered, the whole thing would fall apart (which it did).
$USDe ain’t playing that game.
What Ethena does is, for every dollar you put into $USDe, they go both long (betting prices will go up) and short (betting prices will go down) on $BTC, $SOL, and staked $ETH.
So if these currencies go down overall, they make money on their short positions, while losing money on their long positions (cancelling both profit and loss out, and maintaining a stable value).
The way they return INSANE 29%+ yields (👇) on their $USDe is by leveraging funding rates.
Long story short: certain crypto investment products force traders to pay fees to other traders.
If the majority of traders are going long on crypto using futures contracts, they have to pay a fee to the minority of people going short.
(The idea being that this keeps both sides of the market in closer balance – if the market goes too far in one direction, they get rekt with fees).
The cool part is: when the market does tip too far in any one direction, Ethena starts to earn yields as a result.
(E.g. In bull runs, when everyone is betting the market will go up, Ethena earns profit on its short positions).
…and they pass this profit onto their $USDe holders.
It’s not without downside risk – but one thing is for sure. It’s NOT Terra Luna (hell, this yield strategy has been used safely by TradFi folks for decades).
We featured it in a PRO report, covering the finer mechanics of Ethena here.
Now here’s the kicker:
By taking profits into $USDe and $DAI in equal parts, we’ll be making 29%+ per year on our $USDe and 8%+ on our $DAI…
Will these rates stay consistent? No. They can fluctuate like crazy.
(E.g. $USDe was 113% APY in March, returned to 0% at the start of May, before closing the month out at 77%).
But the idea that we could potentially outperform the S&P 500 (11.3%/year over the last 20 years) on average over the next year, simply by holding stablecoins?
That’s only possible in crypto!
P.S. (Want to learn exactly when to take profits this bull run? You can still get 50% OFF our Crypto Investing Masterclass. But hurry up, the offer expires in less than 24hrs…just sayin’!)
SECURE YOUR CRYPTO, SECURE YOUR SAVINGS
It’s that time of year again. Black Friday madness.
But before you dive in for yet another smart toaster you’ll never use, let’s talk about making real smart moves for your future.
Trezor – the OG open-source hardware wallet since 2014 – is dropping up to 50% off. Yep, that’s half-off on top-tier security and total peace of mind.
Your keys, your coins, no third-party nonsense.
Want to know how much you could’ve saved if you’d bought Bitcoin on previous Black Fridays?
Their Black Friday Calculator has the receipts (spoiler: it’s a lot).
This is your chance to save big. Don’t miss the biggest discounts of the year.
Secure Your Wallet – Save Up to 50% Now!
ARE NFTS ABOUT TO MAKE A COMEBACK? 🖼️
Don’t laugh.
We’re serious.
Think about it…
NFTs are like the Rolex watches of the crypto space. You get rich → you splurge and buy one.
…and now that the bull run has begun, the wealth effect (i.e. people feel wealthy → so they spend more) could be about to breathe new life into the NFT sector.
Here’re the proverbial canaries in the coal mine that are signalling a potential come back:
1/ Big brands are embracing NFT IP once again
Doodles just collabed with some clown from the fast food industry (Ronald McDonald). 👇
If enough degens come out in force, this could end up being like the ‘Stanley Cup’ of the crypto world.
2/ Blue chip projects have been catching bids
The top 10 projects are up anywhere between ~25% and ~100% over the past 30 days, with CryptoPunks regaining its $1B+ market cap.
3/ Darth Gensler is out, which means regulatory clarity could soon be back in!
NFTs were caught in the crossfire of Gary Gensler’s anti-crypto tirade – but now that he’s announced he’s stepping down from the role of SEC Chair, NFTs could once again catch a greenlight in the US.
Does this guarantee that the rebirth of NFTs is imminent? No.
But call us Mary Swanson, cause we’re saying there’s a chance.
BITE-SIZED COOKIES FOR THE ROAD 🍪
Blockscout has just launched its Merits Program – an incentivized journey through the platform. With the Merits Program, Blockscout has added a whole new layer of interaction, making blockchain exploration fun and rewarding.*
Jim Cramer says Bitcoin and other crypto deserves a spot in your portfolio. Nooo Cramer, why are you doing this to us. Pain. Hope inverse Cramer doesn’t strike again.
$DOGE flips Porsche. Imagine explaining to your friend that a memecoin is now worth more than one of world’s biggest carmakers. Moments like this make me believe that we live in a simulation. Wild.
We’re currently growing our team and are on the hunt for a Crypto Researcher and Analyst for Milk Road PRO. Think you’ve got what it takes? Click above to read the job description and apply.
Milk Road's Solana Price page is an easy way to track the price of $SOL and follow real-time updates. Bookmark this page and let Milk Road keep you dialed into everything $SOL, all day, every day. *this is sponsored content
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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.
