The Next Evolution for Castle, Polymarket's Revenue Switch, and the New Bitcoin? - The Castle Chronicle
PLUS: A crypto-native app you need to try!
Welcome to Edition 164 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?
New Year, New Castle
Yesterday, we announced something new for Castle Labs.
Instead of telling you about it, how about we show you?
It’s been a long time coming for this, and we’re so glad it’s finally out for everyone to see!
If you want a bit more backstory, make sure you check out this article from founder Atomist:
In The Markets
Sigh.
All we’re asking for is just a little bit of relief from the markets, is that so much to ask?
Apparently, it is!
Each new week brings new escalations and de-escalations in the Iran war, causing more volatility in markets than we’re typically used to.
Honestly, this is probably one of the longer stretches of prolonged volatility that we’ve seen since Covid, save for maybe the Liberation Day tariffs.
The hardest part of this being that there is no telling which way the markets are going to swing as they’re completely dependent on Trump’s remarks. It’s hard to really tell what is going on in the background, as we’ll never be privy to the behind-the-curtains activity.
This is why we’ve preached cash as a position recently since it’s no use chopping up your hard-earned moolah. This advice extends itself to crypto as well, since any adverse movements in this military operation can wipe out positions that may seem good.
As well, there still isn’t many hot topics in crypto just yet either. We’re still waiting on MegaETH’s launch and a few other tokens that have yet to launch until market conditions improve.
It is a period of patience and sitting on your hands.
In reality, it’s a trader’s market. The whipsaw-esque price action we’re seeing is perfect for traders, navigating the volatility like a prime Jack Sparrow on the raging seas.
A prime example here is Oil, moving up and down 10% each way like it’s nothing. Incredibly volatile for a large asset!
Stocks are also moving similarly, up or down 2-3% depending on the order of words coming from Trump’s mouth, and whether they are construed as positive or negative.
It’s a market of sentiments and narratives, which are all driving price.
With all that being said, let’s dive into the rest of the newsletter to see what went on this past week!
Castle’s Analyst Corner
Featuring: Noveleader
Ever wanted to know exactly what’s going on in our analysts’ minds?
Then this is the section for you!
Our team will talk about anything from AI developments to crypto to even random musings from the top of the dome.
Without further ado….
A Look at Polymarket’s Revenue
Polymarket will turn on fees for most market categories starting March 30th.
The fee structure varies and is downward-parabolic, depending on the market state and the per-share price. So users pay the most when shares are priced at $0.5 and pay progressively less at the edges.
To estimate annualised revenue, we sampled the last 30 days of volume across different categories and applied the new fee structure. Since the fee structure varies, we take 30% of the peak rate as an average rate for the analysis.
In the last 30 days, Polymarket did $9.55b in trading volume, and with the same metrics, we estimate revenue of about $25m, which would be $300m annualised at current volume levels. At a $20b valuation, it would be a 67x multiple; at $9b (ICE investment), a 30x multiple.
On the other hand, @Kalshi is running at an annualised revenue of $1.5b (reported by Bloomberg), implying a revenue multiple of 15x based on their recent round at a valuation of $22b.
Additionally, the Polymarket numbers are expected to go higher as they launch Polymarket U.S.
Castle’s Guest Corner
Featuring: CryptoCondom Intern
Here at Castle, we like to occasionally shine the spotlight on our friends and other people in the crypto community, and showcase the awesome things they build or write about.
In this instance, we want to give props to CryptoCondom Intern and the incredibly useful app that he and his team made called Proximity.
The following is their story…
Building Proximity was not a solo journey. We are a team of three, and the idea came from a frustration we all shared.
Anyone navigating crypto knows the drill. Five browser tabs open at once. One for price data, one for on-chain metrics, one for news, one for your portfolio, one for whatever AI tool you are running that day.
The information exists but it is scattered everywhere and none of it talks to each other. There was no single place on your phone where you could just open one app and have everything you actually need in front of you.
That was the gap we wanted to close. We wanted to build something that respects how crypto people actually operate, fast, mobile, information-dense, and gives them one hub instead of ten tabs.
We started simple. A few core metrics, clean interface, nothing fancy. Then it grew. Users wanted more and the app grew with them into something considerably more complex than what we originally shipped.
Along the way we realised that the intelligence layer powering Proximity had value beyond the app itself.
So we built AgentCanary, the API that feeds Proximity, and opened it up publicly.
130+ endpoints, macro regime detection, whale alerts, narrative scoring, social intelligence across 200+ accounts. Not raw data. Processed intelligence that tells you what the market means, not just what it is doing. AI agents and traders can now plug directly into the same data stack that runs our app.
Where we are now is the part that excites us most.
We are starting to work directly with projects to build customised dashboards together, giving DeFi users a genuinely informative place to track data on their favourite project or sector. We combine multiple APIs into a single experience so the user never has to think about where the data comes from.
They just see what they need.
What comes next is where things get interesting. The next phase of Proximity is about bringing AI directly into the experience in a way that actually respects the user.
Most AI tools in crypto today require you to hand over your data, your portfolio, your behaviour, your intent. We think that is the wrong trade.
Our focus is on building an AI layer that is genuinely useful without being extractive. That means on-device processing, no data leaves your phone, and intelligence that works for you rather than around you. Privacy is not a feature we are adding later. It is the foundation we are building on from the start.
From the Mouth of the Developer
As a developer, I have always been interested in how to bring together different market and macro data sources into one coherent system.
For Proximity, I integrate data from many different sources, from on-chain metrics and ETF flows to macro indicators and market structure. A large part of the development process involves building data pipelines, connecting APIs, and cleaning up time series data properly. For this I rely on APIs from platforms like FRED, DefiLlama, various on-chain data providers, and market data feeds.
The biggest challenge is not collecting the data.
It is filtering out the signals that actually matter. Markets produce an enormous amount of noise, so I am constantly experimenting with new metrics and models to make capital flows and market regimes more visible.
The indicators that resonate most with users right now are the ones that make liquidity, capital flows, and structural market shifts easy to understand at a glance.
The philosophy has stayed the same since day one. All the information you need, on your phone, ready to go.
Proximity is now live on the App Store. Download it here: t.co/ktkouSmggm
All Signals Zero Noise
Crypto Round-Up
The New Bitcoin?
Clickbait aside, this is a legitimate phrase that is being parroted around CT and beyond. This is in reference to all the new press that TAO (Bittensor) has been receiving.
If you’re new to Bittensor, here’s the lowdown:
It’s an open-source platform where users can create decentralized commodity markets called subnets.
Examples of subnets include compute power, AI inference/training, prediction markets, and more.
TAO is the currency powering it all, with 21 million supply just like Bitcoin.
TAO emissions were cut in half in December, creating their own halving, making rewards scarcer over time.
The mainstream attention its getting is surprising however, but it seems to have crossed the rubicon with Jason Calcanis from the All In podcast saying this:
Likely, people are just searching for any way to continue to get exposure to AI, and crypto can be a way of doing that at a cheaper, albeit more risky, valuation.
The downside about TAO right now is that the subnets are fairly illiquid, without decent (or any) revenue models, and people can still game the system for outsized rewards.
The upside here is that there can only ever be 126 subnets, as the lowest ranked ones (by staked TAO) get deleted every so often. Combine this with an AI boom, plus new institutional products for TAO, and you have a decent combo for a potential bullish asset.
TradeXYZ Brings the S&P Truly Onchain
Hyperliquid has been long touted as the “Blockchain to House all Finance” and while to some it may be a bold claim, this most recent announcement is a pretty huge endorsement of that statement.
TradeXYZ is an HIP-3 market built on Hyperliquid, housing a variety of assets from stocks to commodities to crypto to indices, and more.
The biggest thing here is that they can offer a 24/7 trading interface for a variety of assets that may have been previously closed off to that functionality.
The news that is so important is the partnership between TradeXYZ and S&P Dow Jones Indices to launch the first official SP500 perpetual contract.
A massive announcement as it shows endorsement and trust of blockchain from TradFi leaders, plus offering the world a chance to trade something that was gated by market hours, weekends, and geography.
It’s a legitmization of crypto as infrastructure and a legitimization of the industry at large. This isn’t a “partnership” through traditional crypto lenses, but a legit collaboration with real S&P index data.
This is a true showcase of crypto’s ability to be the backbone of finance writ large.
We’ll have to see if there are any other exchanges that will try and come for their crown, but as it currently stands, Hyperliquid sits atop the throne, and it’s on everyone else to compete for the top spot.
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.