The Castle Chronicle: Is it finally a "Green Light" for Altcoins?
PLUS: How to Farm Kinetiq and Polymarket Airdrops
Welcome to Edition 130 of The Castle Chronicle!
How has your summer been? We hope you are reading this issue on the beach.
Here’s what we have for you today:
🔍 Market Watch - Is it now finally the "Green Light" for Altcoins?
🌊 This is How you should play Kinetiq’s Airdrop
🔮 Is it still worth farming Polymarket’s Airdrop?
💙🧡 The Arbitrum Corner is Back!
🏰 Castle Reads - All of Castle’s research you might have missed
📖 Recommended Reads - The best reads from the best researchers on CT
🔍 Market Watch
Gm frens! Crypto continues to be in a nice bullish context, and with that, there are many interesting opportunities. It’s a great time to be a crypto trader.
Price Action
BTC is still around new ATH territory, and my expectation is for this trend to continue. Currently, it’s green lights for all kinds of risk-taking, from swing trading all the way to intraday trading.
Of course, at some point, supply will enter the market, and we’ll experience some bearishness again. When that happens, we anticipate re-accumulation and will wait for re-ignition to continue following long. But for now, there is absolutely no need to worry about that.
Top Performers
Many coins that are seeing big impulses right now are emerging from a choppy downtrend or sideways market. This initial surge can be difficult to capitalize on, but if this trend continues, as we assume it will, there will be many more opportunities on the way.
Taking a look at $CFX, $XTZ, and $ENA on the weekly chart, this price action is far from being considered bullishly trending. Most altcoins have been lagging behind BTC's dominant performance, which has been primarily driven by institutional demand, something that is lacking in altcoin market participation.
Could this be the beginning of a good old alt season? It’s too early to tell, in my opinion. That being said, there is no reward without risk, and taking on risk now is definitely more justified than at any other recent time.
BTC Fear and Greed Index
With the current price action being fairly impulsive on the bullish side, it comes as no surprise to see the index showing greed. That said, I believe the index holds the most value when it shows extremes. So, until I see at least a 90, I’m not particularly interested in this metric at all.
Narrative Performance
Most narratives are in the green this week, with NFT and DeFi leading the charge and gaining close to +30%. Seeing DeFi here is refreshing, although it's mostly carried by $CORN with an insane +235% gain.
We also see decent gains in L2, LST, Oracles, and memecoins. All around, it's a good mix that resembles old-school alt-seasons. Could this really be it?
I’m sure these recent price developments are making market participants feel a lot of different things. Some of you are going to feel bear market PTSD and hesitate to pull the trigger. Others might feel euphoria and over-risk. While I can’t provide real financial advice, I can remind you of a few battle-tested fundamental rules.
Don’t risk more than you’re willing to lose
This is the golden rule of investing, and there is no excuse to ignore it. Don’t be a gambler, fren.
Define your invalidation criteria
There’s no worse feeling than marrying your investment and staying stuck with it for ages. Not only can you end up locked in something that underperforms and slowly bleeds out, but you also suffer from opportunity cost, as you won’t have resources left for other opportunities in the market. I know because I’ve experienced it. And trust me, fren, it sucks.
So have a clearly defined invalidation level, and if it hits, take it on the chin like a man and move on. There WILL be more opportunities in the future.
Keep your risk consistent
Our goal as traders and investors is to seek opportunities with good R:R (risk:reward). That way, when we win, we win big. And when we lose, we lose small. To make this consistent, we need to keep our losses constant. A -1 is a -1, and it should never be more.
While these three rules by themselves are by no means enough for success, they are a good start, and they will help you avoid the most common beginner mistakes.
In the end, it all comes down to the same thing over and over: risk responsibly, and I’ll see you 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.
🌊 This is How you should Farm Kinetiq’s Airdrop
In the Hyperliquid world, everyone has been talking about Kinetiq recently.
This new liquid staking solution will be central in the HIP-3 model that will make possible for different team to build any type of perpetuals market leveraging the Hypercore orderbook and its underlying liquidity.
Any team that wishes to deploy such a market would need to stake a minimum of 1 million HYPE tokens or have that amount delegated to them.
This is where Kinetiq comes into play. The protocol positions itself as the primary liquid staking solution, where users provide their HYPE to earn yield, but more importantly, to lend them to different teams. These teams will then be able to build various innovative perpetual markets on the Hypercore. This is what some have called perps-as-a-service.
During ETHCC in Cannes this year, I even heard a massive alfa : between 40% and 55% of Kinetiq supply could be distributed to liquid stakers once the airdrop happens, which means staking with Kinetiq could yield serious MONEI.
So first of all, if you want to have exposure to Kinetiq, you need to take a chunk of your $HYPE token, bridge them on the HyperEVM & stake them here: https://kinetiq.xyz/
Then, my favorite strategy consists in depositing most of the kHYPE that you receive into the vanilla borrow of Felix (the native lending and borrow protocol of the HyperEVM which is a licensed Morpho fork). After that I’d borrow up to 50% (I took the conservative route) of the amout in HYPE tokens deposited.
I will then be depositing half of the borrowed $HYPE into the Valantis kHype AMM.
(there was some little accounting issue for the kHYPE AMM at launch but should be solved shortly)
I will deposit the other half of HYPE I borrowed on Kinetiq, stake them again as kHYPE, send them to another wallet, and deposit them into the same Felix vanilla borrow product. I will borrow up to 50% TVL in HYPE and then use the borrowed proceeds to deposit into Hybra.
An interesting thread was written on this by @Obesepotato_hl:
This strategy, spread across 2 different wallets, will accumulate Kinetiq points, Felix points, Valantis points (not confirmed yet), and Hybra points while maintaining your $HYPE exposure and being capital efficient.
NFA and smart contract risk shall always be taken into account.
Courtesy of CL
🔮 Is it still worth farming Polymarket’s airdrop?
Yesterday, I read a tweet by @DidiTrading about Polymarket, which led me to dig deeper into this opportunity to determine if it's still worth farming the airdrop at this stage. Let’s get into it.
What is Polymarket
For those who have been living under a rock, Polymarket is a prediction platform on the Polygon blockchain that allows users to bet on an event by choosing between two possible scenarios. Polymarket became extremely popular and useful to the public during the 2024 US presidential elections, when the odds displayed the widespread preference for Donald Trump over Kamala Harris as the next US president.
Polymarket doesn’t have a token, but the team has hinted at it a few times. They’ve already closed three funding rounds from major crypto VCs, including a Series C last week. While we don’t know much about this round, sources in June indicated they were aiming for a $1B+ valuation in a $200M round.
About the Airdrop
A $1B FDV seems like the base case for Polymarket’s token, but we also need to consider the following:
To be conservative, I’d expect a maximum of 10% of the total supply to be airdropped to traders, as they are the only ones eligible (there are no LPs).
Activity consistency might also matter.
Polymarket has been around for quite some time, and some people, like @CC2Ventures, hinted that a possible snapshot was taken last year.
If you want to farm the airdrop, you need to bet on the market. To understand the situation, consider these data points:
Cumulative volume stands at $15.7 billion.
There are, on average, 24,000 active wallets betting on Polymarket daily.
A total of 1.2 million wallets have interacted with the platform, and half of these have bet on 5+ markets.
To remain in the top 10% of traders by size, your average bet must be above $500.
Conclusion
To sum up, if the snapshot hasn’t been taken yet, in order to position yourself for the airdrop, you should bet on markets where you have an edge and that are most likely to go your way (not easy). Additionally, to be in the 90th percentile, your average bet size must be above $500. You may also want to bet on multiple markets and stay active at least once a week.
If I wanted to farm this airdrop, I would first ensure that I wouldn’t mind absorbing a mid-three-figures to four-figures loss on trades, since 90%+ of traders consistently lose money on any betting/trading platform. My expected EV should be high enough to outweigh the expected loss.
In my opinion, at this stage, I would only farm this if I expect the token to be launched at a multi-billion dollar valuation, since the activity on the platform and the average bet sizes are prohibitive for the average user. Statistically, you are expected to lose money in the long run if you bet on these prediction markets.
See you next week, fellas.
milady
Courtesy of Matt
💙🧡 The Arbitrum Corner is Back!
Ladies and gentlemen, the Arbitrum Corner is back.
It seems to be at the right time! The partnership with Robinhood and solidified interest by institutional investors have brought renewed enthusiasm to Arbitrum.
For the next 6 months, we’ll be posting bi-weekly updates on Arbitrum focusing on:
Ecosystem overview
Governance updates
Abstracting the complexity of tech updates for broader understanding
Without further ado, here’s our first update!
Gaming
As part of our efforts to support Arbitrum, we’re also going to share bi-weekly gaming updates, both on the ecosystem and the work of the Gaming Catalyst Program.
Here’s our first update from last week:
Anyone interested in gaming on Arbitrum should immediately go and follow ArbitrumPlay:
Stablecoins - USD.AI
Arbitrum continues being a stronghold for stablecoins. USD.ai has just reached over $50m in deposits and LP.
Arbitrum Chains - Kinto
Kinto planning a recovery post-exploit:
RWA x AI - Novastro
Novastro builds at the intersection between RWA and AI, allowing its users to tokenize real estate assets onchain on Arbitrum.
As part of their value proposition, they include AI-powered compliance, with automated KYC/AML and templated for auditing.They just launched their Testnet.
Here’s a small guide on the platform:
RWA - PYUSD
Arbitrum continues leading with their partnerships. By expanding PYUSD support, a compliant stablecoin, Arbitrum is positioning itself as the best place for Web2 organizations to onboard Web3.
Soon, then all at once.
In fact, apparently there’s another 100+ Arbitrum chains waiting to be launched?
You can be sure we’ll keep an eye on this.
Make sure to continue reading our updates. We’ll be sharing a dedicated RWA-focused long report in the upcoming month.
Courtesy of Francesco
🏰 Castle Reads
Deep dive into the latest Arbitrum program, “DRIP”:
The new weekly AI Dispatch is out now:
The Myth of the Billion-Dollar Idea, by @chilla_ct:
📖 Recommended Reads
@0xasrequired explains their calculations for the upcoming Felix airdrop on HyperEVM with a wise use of data and a comparison to Liquity:
A wonderful piece on web3 companies longevity by @0xtoki_:
@arndxt_xo discussed PUMP’s launch and its implications within the Solana future landscape:
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.