The Castle Chronicle: Brick by Brick

PLUS: We've lost our way, we need to believe again

Welcome to Edition 146 of The Castle Chronicle!

Congrats everyone, we’ve made it to a new week. This means new Chronicle and more bangers from Castle researchers! Cozy up under your favorite blanket and start reading!

Gm all, Here’s what we have for you today:

• 🔍 Market Watch - BTC looks rough again, what’s next?

• 🧱🏰🧱 Founder Corner - Building a Castle Brick by Brick

• 🛸 What Happened to Believing in Something?

• 📖 Recommended Reads - Top reads from the best researchers on CT

🔍 Market Watch

Gm frens! Not much is happening on the charts. BTC is still in a bad context, and therefore, I’m skipping all crypto setups. There is still value in analyzing the market, though, especially in terms of which sectors/narratives are displaying the most strength. So let’s dive into it!

Price Action

My expectation of BTC here is to continue bleeding our or going sideways until fresh demand steps in. Until that happens, I am sidelined and not interested in trading crypto.

Top Performers

Sorting by 7d%, we can see some big gainers this week. But if you look at the 90 day charts, you’ll see that most of it are just random pumps after a downtrend. In my view, these moves are very random, and my system does not capture them, which is also why I’m not bothered at all. No FOMO whatsoever.

Even though I’m not quite looking to put any risk on crypto, I do want to take a look at this week’s winner - SOON. After a long period of bleeding, demand came in big time - that’s exactly what we want to see on a chart! Such moves are worth following on lower timeframes. The isolated expectation for this chart would be a continuation higher. But as we know, it’s not that simple with BTC being 60% of the entire market :shrug:

Narrative Performance

We can see a green wave across the market, but it’s important to note that those are just bounces after prolonged downtrends. Let’s not get too zoomed in. That being said, Prediction Markets, DePIN, L2’s, and DEXes are showcasing the most demand in the current market environment.

To put things in perspective, I’m also including the monthly view, which tells a very different story. There isn’t nearly enough demand in the market right now to seek opportunities on easy mode. It’s off-season, frens.

As always, remember that as traders, 99% of our job is to wait! Once the right season comes along, we’ll get plenty of trades, and our edge will play out. Until then -

Risk responsibly, and I’ll see y’all next time!

Courtesy of 0x_Vlad - trend-based trader and MentFX student

Not following what I’m talking about? Check out my quick cheatsheet to understand how I approach a chart.

🧱🏰🧱 Founder Corner: Building a Castle Brick by Brick

written by Francesco of Castle Labs

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It’s about time I write a founder corner eheh

I am someone that always had a difficult relationship with founders while working for them. Mostly because of my need to improve and fix things that don’t work. Man I just can’t stand if there is something not working properly.

I ended up being involved in Castle almost randomly.

One of my friends CL, told me about this group of guys.

Picture this. It’s the bottom of 2022 where I lost a significant amount in ****, I just met my now ex, left my previous job, and now I’m in the US. I keep getting rejected at the 4th interview. I have literally no money, so that I have to sell an IKEA x off-white carpet I was jealously keeping (I love to collect stuff) to get a flight back to Europe and start life together.

Any sane person would have kept looking for a job and maybe settled for a mid-level protocol. Not me, so I thought about starting to write on Twitter!

So for like a couple of months, I started writing one article a day!

I never really knew whether this would work, but after a while, I started getting retweeted by protocols, getting in touch with some CT bros, and it seems to have started to pick up.

At some point, Atomist DMs me, and he’s like, “Hey, how are you spitting out 1 article a day? Are you using AI?”

To which I proudly reply, I am not (if not for fixing some of the form), and we start getting into a conversation that ends up with me joining Castle.

At the time, Castle was Castle Capital, or Castle Cap.

Joining Castle meant joining a Discord group with a bunch of very smart people who debated theses, had weekly calls, and ran a weekly newsletter.

So I start getting involved in one way or another.

First, writing random stuff on the newsletter, then working with the first clients, then participating in Arbitrum governance.

I think the turning point was during the Arbitrum STIP incentive program. We brought together a group of analysts and started going through all the proposals, advising protocols on how to revise them and, mostly, how to reduce their disproportionate requests. I can’t recall the precise number, but I think we saved around 17-21m in ARB, which was quite a while back then.

As having no particular allegiance, I dare to say our comments were always done fairly, with the main objective in mind being what was best for the Arbitrum DAO.

Eventually, we solidified enough across the research vertical to dedicate full-time to building.

That’s when Castle Cap became Castle Labs, with a separation from the community and a smaller, tighter team focused on research, governance, and advisory services.

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BEING A CO-FOUNDER

So.. from being a difficult employee to being a co-founder!

Working with Atomist is a blast, I could have never asked for a better companion on this path.
We align on what really matters, on our values, and the way to run the business, and yet, complement each other in a wide range of activities you might imagine running Castle would involve.

We keep each other on our toes, are honest with each other and always make the final decision that’s best for the business.

This quote sums it up perfectly:

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RUNNING A MULTI-VERTICAL STARTUP

Castle is somewhat of an alien company in the crypto business, as we’re first and foremost a research house., However, we also have extensive experience working with/for protocols and therefore offer advisory services. Last but not least, given my past as a KOL that you are now aware of, we also assist protocols with their KOL campaigns.

This requires a delicate balance with regard to which vertical to prioritise and how to do so. I am very much aligned with the concept of bootstrapping organically for each vertical. Once it’s solidified and can run by itself, then we can expand, hire new resources and offer additional services .

Going all in across all these services can lead to a strain of efforts, lots of opportunity costs, and scaling too fast and too early.

Anyway, being a founder has been pretty fun.

We always strived to run Castle as fairly as possible, this means avoiding partnering with debatable protocols, trying to avoid turning Castle into a KOL, and making sure always to be objective even when doing paid research.

Working with protocols is not easy at all, especially when it involves research. One way or another, they will always push to get more out of it in terms of “shilling”.

Paid research is often something people don’t like to talk about. As a research company, you actually have limited ways to capitalise on your work and grow. The easiest of them is paid research.

We never compromised our research, even when paid. A lot of people assume that whenever someone pays, you’re going to be nice to them. Well, I mean this is true to some extent: I can’t really do a piece that tears them down and destroys their protocol because its a scam lol. We solve this by partnering with only cool protocols we like and believe in, after due diligence. For the rest, our paid research has the same approach as the organic one..

Want me to highlight how your protocol is the future of finance: Nope

Unless you’re Tether.

For this reason, we believe operating across a wide range of services helps us preserve the quality of our research and avoid being too sales-focused, as we are able to generate revenues in other areas.

Advisory is much harder to close with protocols. Most advisors are big names, and more often than not, these are just glorified KOL deals. However, all of our members have experience having worked and advised a wide range of protocols. This is somewhat our general approach to replace hype with substance, which we think will pay off in the long term.

Some of the challenges I found involve:

• Hiring and training the team

• Build trust to partner with protocols

• Shifting from operational to a more leadership role

Building a team is no joke and is incredibly important, especially when you are a small startup which aims to scale fast. These guys are going to become the key pillars of your future. For this reason it’s more of a dynamic hiring for the long term, and you will have to take into account these “leadership/management” elements as well as the pure skillset.

Having worked in tandem with Atom for most of the time, we have both really high standards eheh both me and him operate on a wide range of activities, but we recognise this is not for everyone.

So when hiring we based ourselves on:

• Alignment with Castle

• Skills (research depth, data manipulation, insights etc.)

• Potential for growth

• Can this guy lead a vertical in Castle

Establishing yourself as a research house is incredibly complex. You acquire trust piece after piece. Comment after comment. Partnership after partnership. This is a long-term game, and we have had the chance to learn a lot both from established companies (what to do / what NOT to do ) as well as from a lot of our other emerging peers, which we actually have a lot of respect for, as we share the same struggles.

Last but not least, given my previous experiences as a founder, I try not to be an asshole. I never understood why leaders feel the necessity to use a power dynamic, as they maintain that it helps employees listen to them. I am more for a silent respect and being aligned together on the final objective.

For this reason, maybe sometimes I compromise too much on the complacent side, and this is something I am learning as well.

Anyway.. there’s a lot of unpack here and maybe something for another piece.

I am incredibly grateful to be able to be free and do what I like every day.

For me, Castle is a safe haven in a sector that more often than not doesn’t really align with my values anymore.

For these and more reasons, Castle is inevitable.

🛸 What Happened to Believing in Something?

I remember back in late 2017, when I first started getting into crypto, that I got Litecoin-pilled. I was a dead-set believer in LTC’s capability to pump to $3,000 per LTC, even though, at the time, it was roughly ~100 dollars.

I would like to go on the record and state that I was absolutely, incredibly, unequivocally wrong. I was young and dumb, and I thought anyone on CT was an expert worth following.

The point of this isn’t to state that I’m an idiot; we’re all aware of that by now.

The point is that I truly believed in my heart of hearts that LTC was the next runner (before there was a runner), and that I was going to make so much money. I was daydreaming about what I could buy using the funds. It didn’t matter that I only invested $500, what mattered was that I believed.

Somewhere along the line, we lost our sense of belief in this space. Perhaps this is a case of true reminiscing, as I’m old enough to reach Unc status, but the feeling was truly different back then.

There was such optimism in crypto, and the vibes were immaculate…but something has changed.

We lost our way.

Every day on CT, there is this thick fog of pessimism that lies flat over us all and suffocates, choking the happiness from our souls. Maybe it’s a product of how the world has changed, maybe it’s a sign of the times.

But it seems that more than ever, people are living in fear. Fear of missing house payments, fear of how they’re going to make ends meet, fear of not feeding their families.

In all this fear, people have forgotten how to dream big. Specifically for crypto, we need to go back to the basics. I fear that we’ve gone so far into the nihilism of the world that we’ve just accepted that everything is gambling, and thus have mostly built apps/projects that lean into this side of degeneracy.

Before FTX nuked the crypto landscape, things were generally built around the tech and what we could do to improve the system we’re trying to replace. Of course, grift was always present, teams still rugged, but it just felt like the price of playing the game.

Now, it feels like everything that comes out is skewed towards degeneracy or how to best prey on the dopamine receptors of its users. We have prediction markets where you can gamble on literally anything, apps to trade bottom-of-the-barrel memecoins, and everything is gamified to the max in the most dystopian way.

I’ve noticed that the longer I’ve been in crypto, the more jaded I’ve become towards our industry.

There are still plenty of teams genuinely building towards a brighter, crypto-entwined future, but no one seems to care. If it doesn’t involve a memecoin around a founder’s cat or an app designed to exploit humans’ already fried nervous system, then it doesn’t gain traction.

Have we really strayed so far from our original purpose that we’ve turned into the thing we swore to replace?

This financial nihilism that seems to have enveloped us is a plague, and it feels like one of our own making. We could choose to ignore the teams that prey on this feeling, but instead, we choose to glorify them as businesses.

Take Pumpfun, for example, very few real products have spun out of their trenches. Instead, we get an incestuous mire of the same bundled launches and grifts designed to part people from their money.

How many users have been burned by the trenches? How many have zeroed out?

How long is it going to take us to realize that those should not be common occurrences?

Now, a lot of this can be just talk, but more people than ever before are leaving crypto to return to stocks. To me, that says we’re starting to fail.

To take that further, I think we’ve failed the people as a whole. Once the dust on FTX settled, we had a small respite where it was cool to be a builder again — and to be in crypto. Then, in a rush to “make it all back” we one-shotted people with addictions to memecoins.

Instead of leaning into what made this space great, we decided it was a better course of action to do the equivalent of financial methamphetamines.

Very few people actually believe in crypto anymore, they just come here to gamble it all on making 1000x and retiring back to TradFi or AI.

You can say that crypto has always been a gambler’s meta, but I really believe that we had a deep root in fundamentals. We were just early enough that an allocation to anything felt like gambling.

All of the early whales were early because they believed in the space and thought that we could replace the current financial system with something better. Very few people could hold ETH from ICO to now, or BTC to 100k, if they didn’t believe in crypto’s ability to be greater than what came before it.

Now, I don’t want this whole schizo-rant to be nothing but doom and gloom. I really do think there are some great teams out there, building things that further our industry for the better.

Teams like Aave, Pendle, Liquity, Hyperliquid, and Infinifi are all examples of dreaming in crypto. They dreamed of creating something better than the banks, better than CEXs, better than the alternatives of traditional financial rails.

I also think this revival in privacy via Zcash harkens back to a time when we, as a collective, believed in something. I believe Bitcoin and Ethereum still stand the fundamental test of time.

We just need to find our way back out of this dark forest.

We just gotta start believing again.

Schizo out!

📖 Recommended Reads

• Excellent read by Fabiano on the new SOL sensation, ORE.

  

• An interesting look at the Stream Finance fiasco by cryptographicas

  

• A great article about crypto and how prolific gambling has become

  

That’s it for today’s issue, we hope you enjoyed it.

You can check out our X for new research reports and weekly gigabrain content.

See you in the next issue,

The Castle Team

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.