The Castle Chronicle: Justin Sun got burned by the Trumps! Is the Internet really Dead?

PLUS: Almanak: The Evolution of DeFAI Agents

Welcome to Edition 137 of The Castle Chronicle!

Schizo here! I’m so pumped to take over the newsletter from my buddy Matt and hope to continue the good work he was already doing! And while you’re waiting to see your coins finally rip (or dip), enjoy another fire edition of the Castle Chronicle!

Here’s what we have for you today:

• 🔍 Market Watch - BTC sideways, but still bullish

• 👨 Proof of Human - The Dead Internet

• 🌞 Tokens are sacred and inviolable

• 🤖 Almanak: The Evolution of DeFAI Agents

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

🔍 Market Watch

Gm frens! BTC continues going sideways but many coins are seeing big moves higher. Let’s check them out!

Price Action

BTC momentum is definitely fizzling out a bit here, but the trend is still ongoing. There’s absolutely no reason to be bearish.

In order for be to become bearish, we’d need to see a trend reversal on the weekly timeframe, which would take months! And most of that time would be side-lined waiting anticipating re-accumulation. We bullish fam!

Top Performers

We’re seeing some serious outperformers this week. Let’s check out a few of them on the charts!

First up, MYX - what the hell? Haha what a CRAZY move. Up over 1500% in a week is not something we see often, especially given the fact it’s not a tiny market cap. I want to include the chart just so we can take a look what a STRONG momentum cycle looks like and what opportunities it presents. This is what buy stopping highs in re-accumulations can do for you. Not too shabby.

Looking at the daily chart of M we can see a very clear story. An initial run up followed by a long sideways. Once price broke out of that range it continued straight up to new ATHs with strong momentum. It makes total sense to try and follow this momentum on the LTFs.

Let’s also check out WLD as there’s a lot of hype around it these days. While there certainly is strong momentum right now, I don’t quite believe in its follow-through. The overall weekly trend is down so I’m expecting continuation. And although price is reaching out of the current range, I’m expecting that to be for re-distribution purposes, just like it happened before (dotted boxes). In order for me to be bullish I need to see all the EMAs start rising and price re-accumulating above them. We’re nowhere close.

Narrative Performance

Overall we see a very nice green week with most narratives adding up to 20%. The two biggest outliers are ICM adding 60% and Derivatives adding 112% - it’s important to note that the whole Derivatives sector is being carried by MYX.

I really like the current market condition. BTC is in a decent spot giving space to other coins. Many opportunities out there for all types of risk shenanigans. Just remember to -

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.

Proof of Human: The Dead Internet

by Schizoxbt

Things are getting weird.

We have officially entered into some really screwy territory.

In what seems like no time at all, AI has taken over the Internet and is infecting our everyday lives like prime COVID. Hell, I’m not even sure what comments are real anymore on X. There’s humans using AI to reply and make posts, and then there is AI making posts to try and sound human.

It feels like a dystopian age of robots.

It’s also a bit worrying that we need to even think about the Dead Internet Theory being a real thing, but here we are. And for those that don’t know what that is, its the belief that AI is behind the majority of interactions on the Internet and that a time is coming where human interaction is failing.

Now, I don’t fully subscribe to this belief because its a bit far-fetched. But what is real is that AI is here and we are seeing it and interacting with it every day.

Being a verifiable human is becoming more important than ever before and you can see this happening in real time. People are desperate for REAL human interaction. To me, this is the exact reason that streamers like Kai Cenat and Speed have blown up so much recently. And yes, even Gainzy too.

Humans weren’t built to be siloed from our fellow man. And we sure as hell weren’t built to be one-shot by AI evolving so rapidly. This is why I think the Proof of Humanity movement could be a pretty important one.

Think of how many people have been completely and utterly bamboozled by Deep Fakes. What if that could be eliminated? What if you could verify personhood whenever you wanted to? Anyone who’s been had by a Deep Fake during a Zoom call would’ve loved to verify they were speaking to whoever it was they thought they were getting.

Luckily for us, there are protocols and projects working on Proof of Humanity. Basically it needs to rule out that you’re talking to a real flesh and blood human and not a dirty clanker.

Worldcoin, Humanity Protocol, Self, and many others are all working to help identify the real humans from the circuitry and wires. While I won’t go into the specifics on each of these protocols, I want to highlight what they’re doing in this space because there are quite a few interesting conclusions we can draw from this movement.

How does it work?

All these projects share at least one thing in common: they have to properly identify that someone is a human and have a way to share that verification at a moment’s notice. There are plenty of ways to do this like iris codes, palm prints, etc.

They are also all focused around privacy and making sure that this PII (Personally Identifiable Information) is safe in the hands of the person it belongs to. This means that people can anonymously submit data like their physical identifiers (think eye photos, palm prints) and know that their information isn’t being stored anywhere except for the user’s own device.

ZK (zero knowledge) technology has also taken a leap forward here as it lets you prove that something is true without revealing the underlying data. Most recently, a project called 3Jane is able to securely and anonymously check your credit score and banking information without them knowing exact balances or numbers.

So when it comes to Proof of Humanity, these projects are able to securely prove that you’re a human to someone or something else, without revealing the actual data that proves it.

TLDR: ZK proofs are gud tech.

Adoption

Now, Proof of Humanity hasn’t had the greatest rate of adoption yet, aside from Worldcoin who just recently passed 15M users verified.

I do however, remember when Worldcoin came out that there were a lot of people fully against giving out any PII. And there will always be those too paranoid to give out this information to any protocol, nothing wrong with that. I also believe that its possible these projects were/are too early for this to really gain traction aside from those in the crypto orbit.

But I think the time is coming. Humanity is important and in a world of ever-increasing AIs, we’ll need to distinguish the real flesh and blood from the tin cans.

Here’s where the speculative fun comes into play: aside from the obvious, why would anyone want to declare and prove their personhood?

Better Benefits for Humans

Well, I recently read this article by Self about their integration with Aave and the usecase immediately made sense: increased yield to verified humans. Essentially they would have incentive programs only for wallets that have verified human users, cutting out those users that have multiple wallets trying to sybil the rewards.

This is one of the most obvious benefits of proof of humanity, letting protocols eliminate sybils by granting outsized rewards to real humans. Of course the downside here is there will inevitably be users that don’t want to do this in order to preserve complete anonymity (or are paranoid) and the price they’ll pay is not getting access to these incentive programs.

I would also assume that any users not wanting to verify for the increased Aave yields will just earn the base yield. So its not like anyone is cut off from DeFi, but they just don’t earn the extra rewards. Until more people get comfortable with zk proofs, there will always be people not willing to put any PII in the potential lurch.

Insurance for Assets

I think it would also be really interesting if there is a way for users to get access to wallet/asset insurance and tie it to their IRL personhood thru proof of humanity as well. Imagine you have a wallet that you’ve verified is yours and verified that you are a real person with zk proofs. Then your wallet gets hacked and you lose all your funds, but luckily, you got insurance on those assets! Because you are a real person and connected a wallet to your identity, you’re covered and can work with your insurance to be whole again.

I feel like that would be a phenomenal use case for many people. And maybe you could also add your assets in your wallet to your balance sheet to help influence credit scores or make taxes simpler by linking a wallet to your person.

Its likely that these more complex actions are a longer ways off and that things like sybil resistant, fair airdrops will be the predominant use case — but we should think broadly about how this could impact so much more than that.

Zoom Meetings

What if you could be sure that the person you’re talking to on zoom is a real person? Well, this is a real solution that proof of humanity brings!

If the call can only start if both users have verified their personhood, then you can be guaranteed that you’re not getting scammed. If the above scenario can be avoided, then we all win. Worldcoin has a potential fix for this called Deep Face and uses their Worldcoin ID to verify personhood.

Gaming

Also if you’re a big gamer like me, you’ve probably fought with/against your fair share of bots in multiplayer games. Now most of them are probably just washed-up old gamers like me, but there is a deep possibility that there will come a time where they are AI. Seems people are already prepping for this as Razer partnered with Worldcoin to help combat this.

AI is rapidly bringing about societal change and will drastically upheave the world, for better or worse. But us humans shouldn’t just roll over and die.

Conclusion

The race against AI is starting and we have to start working to implement safeguards so we don’t all get one-shot by the changes that are coming. While I think things will work out (nothing ever happens remember) and I prefer to be eternally optimistic, there is a lingering black cloud over my head that gives me pause for concern. There are plenty of ways this can impact us in crypto, for good and bad, and we should be prepared.

Don’t let the clankers control you.

And most importantly, don’t let them take your coins.

Schizo out.

Tokens are sacred and inviolable

Well, did you hear about the Justin Sun & $WLFI drama?!?

Simple as that! His majesty, Justin Sun, was the single biggest buyer in the World Liberty Financial seed (Trump’s own DeFi coin) & was holding shit loads of unlocked & locked token once $WLFI TGE happened this past week.

But then, as it always is in Crypto : Drama was not far away

His Majesty’s addy holding far more than a billy USD in $WLFI was blacklisted by the deployer address on Thursday October 4 because of some supposed shady trading behavior on Huobi, Justin own exchange. The rumoura say that they were offering high % APY on WLFI token that users would be < locking > with them, which they were directing right back into the orderbook.

His Majesty answered the WLFI’s accusation in a Tweet, claiming his innocence and the inviolability of tokens.

And the day after, an important outflow of stablecoins happened on Tron blockchain (Sun’s own chain). BUT, lets be honest, for the moment this outflow remains marginal.

BUT STILL, considering that Stablecoins are on everyone’s lips now & that Tron plays a massive role in this field globally, it will be important to watch if this little drama between Sun & WLFI could evolve into something bigger & what consequence it could have on TRON & USDT.

SEE YA,

C-L

GM again frens, Vlad here! Wondering how TRX looks after all this drama? Let’s take a look!

TRX looks decent, but nothing too spectacular. Yes, it's in an uptrend, but it lacks the type of impulsivity I like to see. It just kinda drags itself higher. The highest probability setups have momentum on their side. There's impulse moves that leave behind inefficiency and when those re-accumulate, those are the best setups. Not this though.

"To showcase exactly what it is I'm looking for, I’ve included POI (Points of Interest) on the chart above (white dotted boxes)"

Alright Vlad out!

Almanak: The Evolution of DeFAI Agents

This week, we published a research piece on the next phase of AI Agents.

The main argument is as follows: notwithstanding the recent hype, DeFAI agents are still far from being able to manage significant funds.

This is mainly due to inconsistencies in their results and the limitations of LLM-based execution.

There are already protocols working to solve this. Among those, Almanak focuses on “deterministic strategies”, which ensure verifiable execution of the strategies and avoid issues like hallucinations, prompt injections and more. On Almanak, anyone can leverage an agent swarm to create specific quant strategies. For this reason, Almanak is slightly targeted at more experienced users.

Instead of using AI agents to execute quant strategies, Almanak leverages them for what they are good at: lightning-fast reasoning.

While in other DeFAI protocols AI agents have the role of money managers, Almanak agents instead become a whole team of quant assistants. They help users develop and iterate quant strategies, which are, however, hard-coded to ensure their successful execution.

Almanak also recently concluded a community round through Legion, raising over $2.5m:

We believe that in the current form, DeFAI agents will likely not manage to accrue significant funds, mainly due to trust issues around their execution.

For DeFAI to scale, there is an evident need for tested, deterministic and hard-coded quant strategies.

To exemplify how these work, Almanak already launched some vaults, which attracted over $40m in TVL:

Last but not least, we have mentioned Almanak’s agent wars in a previous article by one of our writers.

This is an understated aspect of the protocol, which will be very interesting to observe as an incentive alignment layer, similar to how Curve leveraged bribes for the “Curve Wars”.

Talking about Curve… Almanak users can now LP alUSD/USDC on Curve and enjoy a few benefits…

We recommend checking out this article to learn more about Almanak:

In order to create their quant strategies, users have to apply to be whitelisted to the Almanak’s Kitchen.

Sign up and give it a try to experience the difference yourself:

https://kitchen.almanak.co/

📖 Recommended Reads

• An excellent overview on Hyperliquid (including recent stablecoin news) by @reisnertobias

  

• Not a read, but a very thought provoking video by @goodalexander

  

• A good look at the ‘Buyback Meta’ by @whoisetimfon

  

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.