Modest Capital

Deploy Wisely

[Modest Capital @CapitalModest]

@SeascapeNature That’s Tiburon with Belvedere in the background — not Sausalito

[Modest Capital @CapitalModest]

@SorcererTrading hi

[Reid Yager @0xYager]

The MEV Letter #0

July 10, 2023

A weekly collection of papers, articles and resources related to MEV.

[jez (equity perps era) @izebel_eth]

forget ur ath, forget ur old trading size, adjust to the current situation and conditions

most ppl (incl old me) blow up because they get used to trading a certain size, and then as they take losses it necessarily increases their leverage

if you take ur levg balance and ape it in spot i promise youll thank me in a month

[Dave White @_Dave__White_]

The future holds a million stablecoins. Today's infra isn't ready.

Introducing Orbital, an automated market maker for pools of 2, 3, or 10,000 stablecoins.

Orbital unlocks capital efficiency by bringing concentrated liquidity to higher dimensions.

w/ @danrobinson @ciamac

1/8

[Santiago R Santos @santiagoroel]

been using a variety of AI tools in my workflow (chatgpt, perpelxity, granola, whispr flow, canva ai) and haven't felt the need to hire for specific roles

for example haven't felt the need to have analysts when I can leverage deep research

Recently started using Cava's AI tool to quickly whip up rough mockups and then send it to the team of designers for fine tuning

the time to production is faster, better, and cheaper

[Emperor Osmo 🐂 🎯 @Flowslikeosmo]

The Stablecoin Revolution is here.

Stablecoins will onboard trillions into the crypto markets.

Projects capitalizing on this growth will be kingmaker plays.

This is my most comprehensive guide on capturing the upside of this secular trend. 🧵⬇️

[jussy @jussy_world]

3 Strategies that will boost your USDC earnings.

Passive 20% / 180% APY, with a full breakdown of earnings. Lend $100, Borrow $500.

Let me show you: 🧵

[olaf @zxocw]

social media feeds becoming downstream of meme price discovery:

when i ask onchain traders how they find alpha, the #1 response is tracking profitable wallets. in parallel, KOLs and influencers play a bigger role in price discovery across all markets than ever before..

[Chamath Palihapitiya @chamath]

This is a really good thread and supports something I’ve been saying privately.

The stakes in the capital markets are so high right now and it all boils down to the nvidia bulls vs nvidia bears.

Both will try to shape the DeepSeek AI conversation beyond a reasonable amount to move nvidia, and thus the market, in their preferred direction. The thread highlights this quite well.

The bottom line is that none of us ACTUALLY know. We have our own biases of what we’d like to be true.

If we’ve spent tens of billions on nvidia, we NEED it to be true that the only way to improvements in AI is through more nvidia GPUs.

If we have started or have a large economic interest in an nvidia competitor (full disclosure this is the camp I’m in) or can’t raise tens of billions for nvidia capex, we want the opposite to be true.

So, in short, YMMV as you read the “news” over these next few weeks but at least you can see both sides here on X and come to your own conclusion.

My two cents are that DeepSeek has found some key innovations (algorithmic through GRPO and bypassing CUDA) that everyone will and should copy. Second, it also seems highly unlikely that Singapore is actually absorbing all of the nvidia GPUs that go there and is a waystation for avoiding export controls. Highly likely that this hole will be closed in short order.

The rest will get figured out by the market as more models are released and more production workflows embrace these various solutions.

Good luck out there!

[Haseeb ＞|＜ @hosseeb]

Here were the most common answers I saw for people's favorite crypto newsletters:

@Decentralisedco Decentralised
@MilkRoadDaily Milk Road
@Shoalresearch Shoal Research
@0xResearch 0xResearch
@rektmando Mando Minutes
@wizardofsoho Weekly Wizdom
@joemccann Asymmetric Market Updates
@glassnode GlassNode
@BoysClubWorld Boys Club
@Unchained_pod Unchained
@bankless Bankless
@colosseum Codex (Solana-focused)
@cot_research Chain of Thought (Crypto x AI focused)

[Mitchell @v02max]

@mdudas @krakenfx Same, 25k ETH

Amazing conversation with Mark from .@CoinbaseSupport

[cygaar @0xCygaar]

One of my goals over the last couple weeks has been to identify which crypto ai frameworks have legitimate chances of success within crypto and outside of crypto.

I've primarily used two metrics to gauge how likely a project is to find traction: code quality and "usefulness".

- Good code signals to me that the devs are competent and willing to invest time to write reusable libraries. Attention to detail is great insight into how love for the game a dev has. Usually these devs are longterm builders that have been working for years.

- Usefulness will determine how much usage a project will get - good code is only meaningful if other projects have a need for it. There are many cases of really well written libraries that never see the light of day. If I think to myself "damn, this would be really cool to integrate" while reading a project's codebase, it's normally a good sign.

If you're looking to contribute as an open source developer to one of these ai projects, I would start here. The last thing you want to do is to spend valuable hours working on something that gets abandoned quickly.

I've been tracking these projects to stay on top of the latest developments in the crypto ai space and to find ai tools that Abstract teams can leverage in their projects. I will always do my best to give Abstract teams any advantages possible.

[Stephen | DeFi Dojo @phtevenstrong]

IN MY OPINION,

The best RWA airdrops will be, chronologically:
1. @ethena (Past, Huge)
2. @usualmoney (Past, Huge)
3. @ResolvLabs (Upcoming)
4. @__reservoir (Upcoming)

[Kazuya @Kazuya_888]

How to think of Eth (the asset) a Manifesto:

Eth is *the* permissionless money. What is permissionless money? Money that can move trustlessly through an on-chain economy. USDC/T have trust assumptions (they can freeze anytime). Before I make the case to you why permissionless money is all that matters, let me first explain what doesn’t matter.

I don’t care about P/E, cash flows, or even burns. What I care about is the network effect of the Eth asset itself and it’s usage of pristine collateral/money in the ever growing on chain (trustless blockspace) economy. If you also own Eth, hopefully I will make the case for you to then come to understand this is all that actually matters. I don’t care about the fees/revenue because if you do any sort of DCF model the truth is every single chain that competes on this is like a 500+ P/E, or not even profitable after validator emissions. Actually if I cared about this, I would own TRON as its pure value but I don't care about this so that's that.

But what about "the tech", do I care about that? I don’t really care about that either, because you’re constantly constrained by past design decisions and there really is no lasting moat in this regard. At best, and under optimistic assumptions, if Eth the asset is valued by technology it could maybe grow to 2-3T from fees/revenue if you scale and execute perfectly on that roadmap. The Sharpe ratio of owning an asset like that, for that kind of upside, in such a disruptive environment, forget it and if somehow Eth community decides to lean into being the “tech” and not the money play I’ll be the first to sell all my bags. The tech only matter as a means to an end in the sense are the devs creating more blockspace with Eth gold standard settlement properties intact? Ok cool, we're all good and let the devs cook on that. They cook that & we the community make money.

If you disagree with me and you want to invest only in “tech” let me help you out: You’d be better off buying the newest alt L1s and then constantly looking over your shoulder before an even newer Alt L1 disrupts your bag. That way you can then quickly rotate your capital to the next gen tech being released. That new gen tech will be 1.1x+ better than [your bags]. Just be aware it’s a commodity product that is in a hyper competitive environment backed by VCs who got in at 1/50th your buy price who will then be dumping their staking rewards (from their vesting tokens, what, you didn't read pg 23, paragraph 3 of their private SAFT agreement that allows them to stake them?) as it converges to zero margins amongst a field of competitors going for a TAM 1/20th of what Eth is competing for. Yeah I simply refuse to all-in with my wealth into that environment for that TAM.

What I do actually care about is permissionless money. Eth itself *is* the product. And the product is valuable because it offers you access to neutral blockspace with a growing and useful on chain economy built on top in which your money/SOV (Eth) will be the kingmaker in. How I measure the product (Eth) success is by how far the distribution is being expanded through growth in L2s & maturation of Dapps/services and products. I want the on-chain economy to grow and Eth on every chain, and that vision is slowly unfolding, but the story and narratives are being told reflecting this are poorly told. I can imagine in the future both humans and ai agents/bots using Eth as money/SOV (once again the only *fully* permissionless money you’re able to use in the on chain economy) as they consume services and products. In this economy USDT/C still exist of course, but they’re not how you store wealth. If anything you borrow them against your pristine collateral (Eth) when needed. It really is that simple.

What about SOL? What about XYZ?

SOL has a different thesis and is not aiming for the money like monetary premiums like BTC & Eth. They can indeed compete on “the tech” which they are, and are doing a great job at it and will likely will win a chunk in the power law share. The design decisions they have taken to build their blockchain reflect that and Eth should not and cannot compete on L1-L1 in that regard, it is a complete waste of time and don't get dragged into thinking Eth should. I’m not a hater, number goes up, I own some and use the chain often, but it’s just not a competitor to Eth how I imagine the design space playing out. I see Aptos, Sui, Base, those are SOLs comp on longer timeframes.

And what about BTC?

BTC is great. I’m also not a hater and number goes up. BTC is indeed digital gold and has a great usage case for that. The only true drawback for why BTC can’t compete on the North Star I envision for Eth is because there is no way to build a trustless on chain economy on top of it. BTC itself would need to hard fork, and opening up the design space to allow this would be against its social contract and risk the Digital Gold narrative. It’s too technical to go into it, but just ask any honest nerd who does not gaslight and you quickly realise all the ecosystem marketing on top of it is just multi sig side chains that are not end-game equilibrium interesting as far as digital property rights go. WBTC also has 3rd party custodian assumptions, which may not seem like a big deal, but imagine a world where trillions of value is being moved around on chain daily, do you really want someone to be able to freeze you through code? I don’t say this as a negative to BTC, because I actually do not want my digital gold to have complexity and instead just have a narrow simple design space that is more rock solid. It has SOV properties, I like it, but it's not a monopoly on SOV and remember Eth grows its own SOV halo more through its expansion and usage of money. BTC grows it by not expanding in this fashion. And I believe it’s going to do well, has great product market fit, and is digital gold. This is indeed useful for portfolio allocation

So why do I still hold ETH (despite the PA?)

Once the community actually gets it shit together they will see that I am right here. And if the Eth community comes to consensus on this, this is a screaming good hold with a great r/r. The TAM for SOV/MONEY is 50T+ in the next 10y. The TAM for blockchain tech is maybe 5T. Eths *only* North Star should be solely building towards being the best permissionless money there is, and the sooner Devs/Community recognise this and fully buy in the better off we are. If that happens, I will continue to only add to my bags and front-run this reality before the rest of the space realises this is the actual crown worth designing for. Alternatively, if somehow the ETH community rejects this premise and goes with we are pure tech and ignores being money, full disclosure I would shift all my digital wealth into the communities that actually believe in the money/SOV properties (BTC) while also placing better risk adjusted bets on tech (Newest Alt L1s, Coinbase stock, whatever) or even barbell some of it with some memes for that matter.

Final quick thought: In case it hasn’t clicked, this is also why both BTC & SOL maxi communities try to position Eth as a P/E tech play — from a strategy point of view if this is the chessboard that I laid out, it weakens the competition for SOV (against BTC) while simultaneously uplifts SOL (against ETH) — and it’s disappointing how few in the Eth community have a spine to call this out or be able to see it clearly, or worse yet fall for this psy-ops. That’s also why I took the time to write this out to make it as simple as possible for it to click to everyone who holds Eth and as my contribution to the Eth community. Here is actual common sense being spoken to you and I hope it gives you considerations to think through and awakens a light bulb in you

@mikeneuder gives a great talk on many of these points and I’ll link it below in the next post. Never spoke to him, but he is a G and gets it. Thanks for coming to my TED Talk.

[Modest Capital @CapitalModest]

@NWischoff SEC requires net historical performance to be included in decks.

[Bill Tai @KiteVC]

@SJosephBurns Leverage

[Samir Vasavada @samir_vasavada]

(1/7) We tried to scale our company too fast and fell flat on our faces. We recognized these mistakes and underwent a year-long “refounding,” changing our culture and operating model. It was tough, but we’ve become stronger and can serve our clients better. Hopefully, this is helpful context for other founders who have found themselves in the same position. https://t.co/nBkO5ANtLO

[Samir Vasavada @samir_vasavada]

Work life balance in early stage startups is a fallacy. You have to work *really* hard to win. People who disagree with this tweet just shouldn’t work at an early startup.