The Castle Chronicle: Don't Trust
PLUS: DeFi made easier? Arbitrum has reached another milestone!
Welcome to Edition 140 of The Castle Chronicle!
Gm gents, welcome back to another edition of the Castle Chronicle! Token2049 is currently ongoing so expect a lot of exciting new developments after this week, but for this week we’ve got a banger for you. So kick your feet up and relax with Edition 140!
Here’s what we have for you today:
🔍 Market Watch - More sideways, featuring ZEC, MYX, XPL, and more!
🪨 Rocksolid - DeFi on easy mode
⚛️ The Founder Corner - Don’t Trust
💙🧡 ARB Corner - $20B in value secured onchain
📖 Recommended Reads - The best reads from the best researchers on CT
🔍 Market Watch
Gm frens! Another sideways week for BTC, who would have guessed? As always, there have been some opportunities in the market, so let’s check them out!
Price Action
Zooming into the 1D chart this time, we can see a well-defined accumulation by now. The gameplan for BTC itself is to wait for a clear bullish breakout from the range to follow it on the lower timeframes.
As long as BTC continues ranging here I believe it’s fine to look for relative outperformers. If BTC happens to break down from here though, I will no longer look for any beta plays at all.
At that point the overall context of the crypto market would be very uncertain and I would need to see more confirmation before taking any crypto trades whatsoever.
Top Performers
This week we only got 3 big outperformers with the biggest winner in MYX, gaining an impressive +65%! Followed by ZEC and XPL, both gaining over +30%. Let’s dive deeper into all 3 of them!
The 1D chart of MYX tells a very clear story. After an initial period of accumulation price broke out higher and continued moving higher via re-accumulations. My expectation here is that the current sideways price action will once again result in a re-accumulation and continuation. MYX is most definitely on my watchlist.
While ZEC is having a nice move this week, when I look at the W chart I am not impressed at all. This is a choppy, weak market with no impulsivity behind it. EMAs are flat and it’s all one big sideways nonsense. And while there might be some trend on the LTFs (low timeframes), I see absolutely no point in picking this over a market that has great top-down trending alignment.
And lastly, we got XPL, the new kid in town! When this coin initially released I was following it on LTFs (low timeframes), especially after that re-accumulation. But price has since distributed and started selling off quite heavily. Initially I expected that to be for a bigger re-accumulation, so I was waiting for some sideways price action and a breakout higher, but that didn’t really happen. Instead XPL continues to bleed out and by now I’m not interested at all.
Narrative Performance
Derivatives are seeing a big uptick, but it’s all carried by APEX gaining +417%! And in case you’re wondering why this doesn’t show up in the TOP Performers section, it’s because it’s a small cap (~200M) and I generally filter those out.
ICM is also seeing some green, carried by FITCOIN (+57%), LAUNCHCOIN (+39%), and NOODLE (+27%).
The rest of the market stays relatively flat this week.
Lastly I would like to add that there are more opportunities in the market, not just the few that are on the top of the relative outperformers list. I personally had trades on ASTER and STBL last week and I’m waiting for them to set up again. The gameplan here is to wait for a strong breakout and follow that momentum (as always).
And that’s it for this week! I hope you find this section useful and that it helps you navigate the market a little bit.
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.
🪨 Rocksolid: DeFi on easy mode
There’s something to be said about simplicity. Especially when you can apply this to crypto protocols!
Back in my day, basically every protocol’s UX was godawful and you had to read whitepapers just to understand what the heck was going on. Thankfully, teams seemed to have learned and applications today are easier than ever to navigate.
I’ve said this before, but in order to really get adoption rolling, you need to create a product that someone with no experience in crypto can look at and understand. This will be an ongoing evolution in our space but steps are being take in the right direction.
So while scrolling on X (sidebar, I still really hate that name), I saw a post from my buddy Rektdiomedes about Rocksolid.
“Rocksolid is a brilliantly thought-up defi blue chip in the making…” Straight from the mouth of Rekt himself, so let’s look into this new launch and see what’s what.
But before we get into that, what is Rocksolid? Rocksolid provides white-label vault infrastructure for any token issuers to create their own onchain structured products.
So entities like DATs, institutions, anyone that can issue a token, can get access to professionally curated DeFi yield and strategies without having to manage all the behind the scenes work.
This links well with my initial point of making things easy and simple. To get true adoption, we need to abstract away a lot of the complexity (especially with DeFi) that most of us have gotten used to.
So Rocksolid has just came out of stealth and announced their $2.8M pre-seed raise, while also dropping their first product - an rETH vault in partnership with Rocket Pool.
At the time of writing, this vault is offering over 20% on rETH deposits and offers a good look at what Rocksolid’s vaults look like. In this case, the vault manager allocates rETH across various DeFi protocols, like AAVE and Morpho, whilst monitoring other opportunities in the DeFi space.
Neat little add-on here is that Rocksolid can allocate capital across L2s along with Mainnet and even will do a little rETH looping here and there. If you want to take a look-see at their vault in action, here’s the Debank:
In my opinion, you’ll see more and more vault-based projects pop up, as a lot of regular users don’t want to take the time/effort to actively manage their funds and are willing to pay fees (like performance fees) for someone else to manage it for them.
For what it’s worth, it looks like Rocksolid has a solid (kek) foundation and if they can use their connections to try and get some special deals for any vault depositors, then that is another feather in their cap.
I’m a fan of anything DeFi and stuff like this excites me, so I’ll be looking forward to trying out their product in the near future.
Schizo out!
⚛️ The Founder Corner: Don’t Trust
When I first discovered crypto, it was out of intellectual curiosity.
Two things in particular: The idea that a set of validators could be coordinated and incentivized to keep a ledger pure in their own interest, and the mining difficulty adjustment mechanism. To put this into context, it was 2011, and there were very few resources available about Bitcoin, with only a few nerds and cypherpunks discussing it on Internet forums.
I ran BD for one of the first crypto exchanges ever, a strange piece of history. We were the second largest exchange in the world, only smaller than the infamous Mt. Gox. The third largest was VirWoX, where you could trade between BTC and SLL, or SecondLife Linden Dollars, its own metaverse virtual currency.
Back to the mining mechanism and the idea of trust. The OG motto is “Don’t trust, verify”, I remember t-shirts at Scaling Bitcoin 2015 in Hong Kong (the site of the infamous Hong Kong accord) printed with this saying.
Mining is a mechanism that has been widely misunderstood by TradFi, the late-coming participants to blockchain. To them, BTC was a fool’s gold, some digital collectable wannabe trying to topple a global monetary system. In fact, the blockchain mechanism doesn’t work without economic incentives driving honest behavior.
Proof of work (POW) was and remains revolutionary, yet widely misunderstood. Bitcoin maxis will argue POW is an open network, free for anyone with an internet connection, a machine, and electricity. Many crypto enthusiasts I met early on were actually electronic engineers fascinated by the idea of transforming electricity into a monetary expression.
Old Bitcoin wallets were a graphic of a leather wallet, the old BTC logo, and it took a few days to sync and download the full node. Fast forward 14 years, and interfaces are smooth, seamless, stunning, and high-trust compared to the full node model. However, the core mining security remains.
In a POW network, the idea of trust is transformed. Everything is about trade-offs. Purists complain that Ethereum was premined, that Proof of Stake (POS) is a closed system that enriches those who already hold it. Pick your model - there is no fair launch possible past the BTC immaculate conception - and understand the tradeoffs of trust. POS keeps validation with those who hold a stake. The premise that validators should be honest because they don’t want to undermine their own bags, and the rising cost if one were to acquire enough stake to corrupt the network, has held true so far. Of course, there is MEV and all kinds of other economic and technical games that are new with fascinating outcomes, especially in DeFi.
Trust comes in all shapes and forms, and as DeFi becomes more widespread we will rely further on some trust assumptions. The average person won’t run their own validator, store a full node, and will use a centralized RPC. But we have all the tools and competing infrastructure, where different players will fight to build robust, competitive infrastructure.
Why all this surface-level technical talk? I want to talk about trust. The idea when I entered crypto was to be your own bank, to opt out of the centralized trust model and system and be able to access a global financial system with internet access and an open source wallet.
Fast forward from that leather wallet loading a full node in the background to the spinning gas pump yield farms of DeFi summer 2020, and the industry took leaps forward thanks to years of infrastructure, dev tooling, innovation, both failed and realised, all leading to fruit farms and pool2 incentives. But underpinning the spinning numbers are transparent, self-executing financial applications built on a decentralized network with validators fighting for digital rewards, all to keep the network secure.
In my career, I’ve spent countless hours thinking about trust, or how to minimize its need. We wrote a whitepaper in 2014 about the early foundations of decentralized audit, how to create a trust and accounting check and balance to help users verify the solvency of a crypto exchange using early zero-knowledge proofs.
It was at least a decade before its time, and we’re still trying to solve CEX solvency tracking (mainly the liabilities). The impetus for this work? The collapse of Mt. Gox, one of the first massive failures of centralized trust. In the near term, we can recall the failures of trust by backing the supposed smartest guys in the room - FTX, Celsius, 3ac and the like.
Celsius collapse also brought about what I believe is one of DeFi’s defining moments. In a time when customers had to guess about Celsius’s solvency, the world could see a glimpse of its balance sheet, watching a linked wallet pay down its Aave debt onchain to release its stETH.
In 2016, while running a cross-border payments startup (using bitcoin to clear b2b payments between Asia and LatAm), I met the head of transactional banking at a large, well-known European bank.
One thing he said particularly stuck with me to this day: “Banking is essentially two things- contracts, and transactions.” DeFi is the greatest innovation in banking in the digital age, one of the reasons I continue to love building in this beautiful (and sometimes absolutely cringe and full of grifters) industry.
DeFi is open, transparent, and composable to a fault. For all the beauty, we also face dangers, with billions lost to hacks every year. But we also have all the tools to analyze, understand, and verify. Builders have the opportunity to make great UI to not only give users access to DeFi but also show where their money is in the machine at all times.
When my cofounder, Dimitar and I first started talking about building something, we wanted to build infrastructure that would power DeFi not just in the next year but for the next decade. We aimed to develop infrastructure that would underpin credit markets, laying the groundwork for the backbone of interest rate derivatives, a yield curve in DeFi, and powerful fixed-income instruments.
Still, the greatest frontiers in DeFi are rates and FX. With IPOR we embraced the transparency of the smart contract-based modules of rates in DeFi, with IPOR Indices being a more transparent, market-driven, and real-time indicator than its centralized predecessor.
Now, in building Fusion, we sought to build a powerful stack for DeFi asset management, all the while minimizing the trust assumptions. In building Fusion, we didn’t provide staunch guidelines. Instead, we gave the team the challenge of designing an infrastructure around the premises of transparency, security, modularity, and automation first.
Trust is something we have to do always, but again, minimization is the key.
Within IPOR Labs we have several trust layers: team checking team, pre-deployment walkthroughs, third party audits, testing, automatic verification of contracts on etherscan, and one-click factory deployment. Each Fusion integration is smart contract-based from the Fuse system, connecting vaults to protocols, oracle middleware and custom pricing modules, self-accounting vaults, everything displayed on a UI where each user can analyze the strategies in which they deposit.
The gated smart contract construct minimizes the trust assumptions for the offchain automation as it must execute within Fusion rails, a secure onchain investment universe.
We sought to build a trust minimized, powerful DeFi execution engine. A permissionless stack where strategists can build, launch, and adapt strategies without touching the vaults’ core construct or needing to upgrade. Users can understand the strategy composition, authorized protocols and assets, location of assets, effective leverage, interest rates, exchange rates and more. They also have the ability to answer the question we were unable to answer in the failures of MTGox, FTX, Celsius: “Where is my money?”
With all the innovation of DeFi, it’s also full of risks. We have the responsibility to do our own research, and it always helps to have a UI to be able to view, contextualize, and click through. DeFi is opting out of the centralized trust mechanism, but always remember: “Don’t trust, verify.”
Written by Darren, Founder of IPOR Labs
💙🧡 ARB Corner: $20B in Value Secured amidst Multi-Sector Growth
Arbitrum has once again crossed $20B in value secured onchain, a milestone that reflects more than just TVL growth. Momentum is spreading across RWAs, credit markets, derivatives, and infrastructure. Each vertical is pushing forward on its own, but together they are stacking into a flywheel that strengthens Arbitrum’s position as the leading DeFi L2.
RWAs Meet AI: USD.AI’s Ascent
RWAs on Arbitrum are no longer just tokenised T-Bills. USD.AI has reached a $500M market cap, with backing split between Treasuries and tokenised GPUs. The allocation to AI hardware is small, but it signals something bigger: DeFi rails are now being used to finance compute.
Entropy data shows RWA AUM at $480M this month, up 33%, with Theo’s thBILL adding $65M alone. These flows are turning RWA-backed stables into core liquidity for Arbitrum, not just niche products.
DRIP and the DeFi Lending Renaissance
Arbitrum’s DeFi TVL is hitting all-time highs, and the DRIP program is the main driver. Unlike incentive schemes that reward idle LPs, DRIP directs emissions to borrowers who post yield-bearing collateral.
In just three weeks, ETH supply on Arbitrum grew 5% (733k → 769k) while Linea’s ETH supply dropped during its own campaign. USDC borrowing rose 8% ($449M → $485M). Credit demand is clearly concentrating on Arbitrum. By rewarding leverage instead of passive liquidity, DRIP is making Arbitrum the most capital-efficient credit market among L2s.
Ethereal: The First L3 Trading Playground
If DRIP is about capital flows today, Ethereal is about the trading experience tomorrow. Launching on Arbitrum One, it is designed for CEX-level performance with sub-20ms latency and roughly one million orders per second, while keeping assets in self-custody.
The roadmap points to a migration to Converge, an Arbitrum-secured L3 using Celestia DA. The important signal is that the first serious L3 for perps is emerging from Arbitrum, cementing the chain as the testing ground for frontier infrastructure.
Boros: Funding Rates Become Tradeable
Perps generate $150–200B in daily volume, yet funding rate risk has never been directly tradeable on-chain. Boros by Pendle changes that. Funding rates are tokenised into Yield Units (YUs), which can be bought or sold independently of price exposure.
The initial rollout is conservative with $10M open interest caps and 1.2x leverage, covering BTC and ETH markets. More pairs and feeds are planned. For the first time, traders on Arbitrum can separate price risk from carry risk, while protocols can build structured products around this new primitive.
The Bridge Goes Native
Arbitrum’s new embedded bridge is already being integrated by Camelot and ApeChain. It can be dropped into any dApp as an iframe, comes with MoonPay fiat on-ramps, and taps routers like LI.FI and Across behind the scenes.
This means a user can land on an app, buy USDC with a card, and bridge to Arbitrum without ever leaving the interface. RWAs may bring institutions and perps may bring traders, but the embedded bridge is what makes onboarding seamless for everyone else.
The Bigger Picture
The $20B secured milestone is one datapoint, but the deeper story is about alignment. RWAs are growing, DRIP is driving credit, L3 infra is arriving, derivatives are filling gaps, and onboarding is improving. Each of these developments feeds the others.
Arbitrum is not chasing attention. It is building the most complete stack in DeFi.
📖 Recommended Reads
Since Perp DEXs have been all the rage, here’s an article by @Tristan0x about how they’re fixing Solana’s Perps Problem
A look at the Compute value chain by @melt_dem
Recommended reads can’t be complete without the new Vitalik piece, describing what low-risk DeFi can do for Ethereum!
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.