The Castle Chronicle: ETH's Strawmap, Aave Will Win, and the New AI token Everyone is Buying
PLUS: Agentic Finance continues its growth with AI tokens as new collateral?
Welcome to Edition 161 of The Castle Chronicle!
Gm all!
Welcome to the newest edition of the Chronicle!
You’ll get a curated list of the most important macro news and DeFi news, along with insightful posts from guests and more! Actionable intel done the Castle way 🤝
Without further ado, let’s get into it, shall we?
In The Markets
We couldn’t buy a quiet week if we tried, could we?
It’s a little tiresome knowing that each week we get hammered by some new news, but alas, we cannot change what we have no control over!
In the past few days, we had a new war unravelling, with Trump setting his sights on Iran. The US dropped bombs (literally and figuratively) over the weekend with this incursion, causing unrest in the broader markets.
Once again, BTC and crypto were hit the hardest as they’re a very liquid 24/7 market. While this sometimes works in our favour, it also goes against us, specifically when people can use crypto to express negative market sentiment during typical stock market closures.
This new attack on foreign soil causes a lot of issues, primarily in its onslaught of uncertainty. Markets don’t like uncertainty.
Also, because of the attacks' location, the Strait of Hormuz is effectively closed. This is a major problem, as a large chunk of the world’s oil passes through the strait, with no immediate viable bypass.
Typically, this would bring inflation downstream, as the shock to energy prices would trickle into other sectors. This only really matters if we see a long-term closure of the Strait, so we may not see this happen.
However, if we go through all the strategic oil reserves, and the conflict goes on for months (pls no), then we may see some more negative impacts.
The silver lining we can take here is that, with midterms coming up, Trump isn’t likely to make this a prolonged engagement, preferring to keep it short and sweet to help boost midterm numbers.
Luckily for us, this didn’t impact the level of crypto news and insights we gathered, so let’s dive into the rest of the newsletter to see what went on this past week!
Crypto Round-Up (AI Edition)
Venice Taking Over Crypto’s AI
“Civilization is best served by powerful machine intelligence when it respects the sovereignty of those who use it.”
That’s a direct quote from Venice, and it very accurately sums up what their product is being used for.
The blessed meeting of AI x Crypto has been prophesied for a while now and has evolved into many different directions, but the path Venice has chosen is the one less travelled.
All major AI providers store your content, prompts, responses, and more, meaning that everything you speak about is being logged. But Venice has created a way for users to interact with various AI models in a private, freedom-first way.
Thus, Venice has been picked up by CT and has become their new darling. But, as it actually has a very solid use case for private inference, this seems to be one of the few times CT really hits the nail on the head.
Venice employs a dual-token model with VVV and DIEM.
VVV is currently up around 140% since last week (around 400% since the lows of February!), proving that there is still money to be made in crypto if you’re actively searching around.
DIEM, their other token, can only be minted by locking staked VVV and is used to unlock Venice API capacity. The exact math is: 1 DIEM token = $1 of API inference per month, which never expires or changes value.
In the tweet below, you can see how this user can run his OpenClaw automations entirely on his DIEM inference claims, meaning he never has to pay for a subscription!
Venice is really showing off crypto’s skill and how it can be applied to general AI infrastructure, in a way that anyone can use.
This is the path to accelerated adoption. This is the path forward for crypto.
Facilitating Agentic Money
Piggybacking off the previous section on Venice, we switch gears a little bit.
f(x) Protocol, which we’ve previously talked about, has expanded on its agentic money thesis in a tangible way.
They recently announced their fxUSD Agentic Stablecoin Vault on Morpho, in collaboration with DeFi/vault curator 9Summits.
This vault unlocks liquidity for holders of $BANKR, $CLANKR, $VIRTUAL, and $VVV. Also, it signifies a shift in collateral options, indicating that agentic tokens/AI agents are worthy of serving as stablecoin collateral.
The vault currently offers nearly 14% APY on fxUSD, a solid option for stablecoin aficionados looking for yield in a down market.
Clearly, AI Agents are here to stay in crypto, and we expect this to continue to grow and accelerate over time.
The bet on compute becoming valued as a commodity like digital oil only adds fuel to this fire, and AI Agents transacting on crypto rails bring this to a scalable reality.
A New OpenClaw Competitor Has Appeared
OpenClaw was one of the AI revelations that hit the ground running and never stopped. However, the downside of being the first iterator of any frontier technology is that anyone can come for your throne, taking advantage of any slip-ups in your product.
Nous Research created Hermes, a different take on this new wave of agents, one that is built for more long-term growth. OpenClaw is at its best when doing instantaneous real-world actions, while Hermes will grow with you, learning and remembering all tasks across its persistent memory.
An agent that can evolve over time is a huge boon for any creator/builder.
Here’s a very interesting use case of Hermes, straight from the horse’s mouth:
Personal AI Agents, if done correctly, will be one of the most transformative pieces of technology for everyone. A pocket computer that can help users create, iterate, run tasks in daily life, and eliminate stress, is the future that old movies used to dream up.
Every week, we say that AI is finding new ways to push boundaries, and each week we are proven correct.
Enjoy the future, folks.
Arbitrum Corner
Welcome to another edition of the Arbitrum corner!
The vibes are not exactly immaculate, considering the worldwide uncertainty during the last couple of weeks.
Nonetheless, Arbitrum has been at work for a long time to ensure its network is as little impacted by market trends as possible, by focusing on the big guys.
Just a couple of weeks ago, Robinhood announced the launch of the testnet of its chain, an L2 on Arbitrum, with a specific focus on onchain asset tokenisation.
Fast forward a couple of weeks, and the testnet has already processed over 10 million transactions.
Nonetheless, given the high profile of Robinhood as well as the scale of it, we expect this testnet to take slightly longer than what we are used to, and run for a few months of testing.
To bootstrap development, Robinhood is also contributing $1m to the Arbitrum Open House builder program.
Even taking into consideration the recent market downturn, all of the recent developments are bringing more and more onchain activity, reinforcing Arbitrum’s positioning as a financial network.
These efforts are proven time and time again by the increasing number of financial institutions and organisations using Arbitrum to transact. This month, we saw strong PYUSD inflows through LayerZero on Arbitrum.
In just a year, the transaction count has doubled from 2 million to slightly under 4 million transactions daily.
Arbitrum’s TVL within RWAs also continues to grow, with over $750m.
Arbitrum also has the highest amount of tokenised assets, with over 1727.
One of the key players, Spiko, reached a significant milestone the previous week, with over $300m in TVL, becoming the largest issuer with their EU and US T-bill products offerings.
We’ve also seen Tally launching an ICO on their new integrated platform for token launches, with idOs network’s sale going live.
Bungee also launched Incognito, where users can pay to any wallet, swap to any token, and bridge on Arbitrum without leaving any onchain trace.
In other news, here’s a deep dive on how you can leverage ERC 8004 for AI agents on Arbitrum, as well as the planned launch of CLUTCH, future perps on NFT for selected communities.
Starting in April, Arbitrum is also launching its Mentorship program, an 8-week programfor 15 early-stage teams with a clear path to launch on Arbitrum.
Think you have what it takes?
In The Know
Theo Network recently announced thUSD, a yield-bearing, gold-backed stablecoin for crypto. Having a stablecoin backed by gold is one of those no-brainers, given its the world’s deepest and most liquid commodity market. Not to mention, one that is incredibly hot right now, with gold accumulation being talked about everywhere. Theo uses a similar structure to other stablecoins, where thUSD is minted using thGOLD and then hedged by shorting gold futures across multiple exchanges, generating a delta-neutral position that earns yield. It might be a worthwhile stablecoin to help diversify your stablecoin exposure.
One of the largest dramas in recent DeFi memory seems to be coming to an end, as the temp check for the new Aave proposal is set to pass. This consolidates all Aave revenue into a single stream, flowing directly to the AAVE token. It’s a win for DeFi tokens everywhere if Aave fully becomes a token-centric business.
The Ethereum Foundation dropped the newest roadmap for Ethereum called strawmap. While intended for a more technical audience, here is the general gist you need to understand:
Faster L1 speeds, finality in seconds
10K TPS enabled via zkEVMs
10M TPS achieved by L2s, via data availability sampling
ETH L1 being insulated against a post-quantum future via hash-based schemes
Shielded ETH transfers creating a private L1
That’s it for another edition of the Chronicle! Every week brings new opportunities, so don’t fret!
We’re all gonna make it eventually!
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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.