🥛 BONER pilled 🍆

GM. This is Milk Road, the daily newsletter delivering an artful blend of crypto insights and d*ck jokes.

Here’s what we’ve got for you today:

✍️ Uniswap found its cash machine in a weird place.
🎙️ The Milk Road Show: First ICOs, Then ETFs… This Could Be Crypto’s Next Capital Wave.
🍪 Tom Lee: Traditional financial rails weren't built for agents.

Prices as of 2:00 p.m. ET. Powered by CoinGecko.

UNISWAP FOUND ITS CASH MACHINE IN A VERY WEIRD PLACE 🍆

Since 2020, the UNI token did pretty much one thing, and one thing only: it let you vote on stuff.

Every dollar of Uniswap's trading fees went to the people supplying liquidity (cash) to its pools, while holders got the opportunity to vote on protocol changes.

But that changed in December after holders passed a proposal called UNIfication.

Now the protocol takes a slice of those trading fees → uses that money to buy UNI on the open market → and destroys it.

(A buyback, basically.)

Except the shares get shredded instead of stuffed in a vault somewhere.

That engine has been live since December... but the fuel for said engine only turned up in July, with the launch of Robinhood Chain (the Ethereum L2 built for 24/7 onchain stock trading).

Uniswap deployed there a day after it launched and became the DEX that nearly everything on the chain traded through, now handling 86% of its daily volume.

And in late July, UNI holders voted to switch protocol fees on for Robinhood Chain trades…

Source: DefiLlama

Revenue went from ~$100k a day to ~$244k a day, with Robinhood Chain alone now making up 60% of the burn.

That shakes out to roughly $90M of UNI destroyed per year against a ~$3.5B market cap, or ~2.5% of the supply retired annually (better than the average S&P 500 buyback yield).

Standard Chartered's Geoff Kendrick set a $100 UNI target for the end of 2030 back in June - then last month, said it might be too low.

Which raises the question: are people really that interested in tokenized stocks?

In a sense, yes.

Uniswap did ~$130M of tokenized stock volume in a single day, roughly 10x where it sat a month earlier. But a big slice of those fees isn't coming from anyone trading tokenized NVDA. It's coming from memecoins.

And what people are doing with them is... creative.

See, there’re these two launchpads, Bankr and long(dot)xyz, that let anyone mint a memecoin whose trading pair is a stock token instead of a stablecoin.

I.e. To buy the memecoin, you pay in tokenized shares. And in an automated market maker, whatever you pay in, stays in the pool. So every purchase pulls stock tokens out of circulation.

So, hypothetically… say you were to spot a stock with heavy short interest, meaning plenty of people are betting it falls. And say that stock is HIMS, the company selling men's hair and 'bedroom performance' pills, with 58.7M shares sold short.

… so you mint a memecoin called BONER, point its trading pair at tokenized HIMS stock, and start posting about how “a big green BONER candle will take HIMS to the moon.”

Yeah, well - someone did pretty much exactly that on August 20th…

Source: MEXC

By last weekend, the BONER pool held 31,198 of the 58,714 tokenized HIMS shares in existence.

(Yuh. More than half the float is sitting inside a joke coin's liquidity pool!)

But then the NYSE shut for the weekend, which meant no live share price to arbitrage against and no way for the issuer to mint more tokens.

As a result, BONER ran 1,000% in 24 hours to a ~$40M market cap, with a few thousand dollars of buying pushing tokenized HIMS to $132.64, while the actual TradFi share had closed Friday at $28.84. 👇

Source: DEX Screener

Then Monday hit.

The NYSE opened, the issuer minted fresh tokens into the premium, and the whole thing collapsed inside of two hours.

Real HIMS barely moved, finishing the day at $29.41 - because the squeeze happened inside the tokenized wrapper rather than the stock itself, and those 58,714 tokenized shares are about 0.1% of the shares sold short.

Nowhere near enough to force a single short seller to cover (but you can see how, down the line, this sort of thing could lead to another GameStop).

And the theme is spreading...

Nine memecoins now trade in HIMS-quoted pools, SAYLORMOON holds 26% of tokenized Strategy stock, and memecoin pools have swallowed roughly 11% of tokenized Tesla.

Every one of those trades settles on Uniswap. And every one burns UNI.

Long story longer: the animal spirits are returning to crypto, and they've got a hard on for stock/memecoin pairings.

The beauty of all this? You don’t have to pick the right memecoin to win, you can just buy the picks and shovels.

(E.g. Uniswap.)

In fact, that’s exactly what our PRO analyst John Gillen has been doing. He bought UNI on August 28th at ~$4.45, then added again two days later as it kept running.

He's already up ~22% and reckons almost everyone is still out of position on the trade.

Don’t miss his next entry - try Milk Road PRO for a buck for 7 days to get all of his trades in real time.

BITE-SIZED COOKIES FOR THE ROAD 🍪

Selling out: Fed Chair Warsh disclosed 30 crypto positions back in April. By August he'd sold them all in to meet the ethics requirements at the Fed. Here’s what he sold…

Tom Lee: Traditional financial rails weren't built for agents. A card swipe moves through 24 different systems to get validated - useless for microtransactions.

Raoul Pal: The doom narrative about the dollar collapsing has cost people more money than anything else in financial history.