In This Issue
- The team from Unstoppable Domains discuss NFT domains.
- Erik has a report for you on Trader Joe’s new AMM: Liquidity Book.
Premium members also get the following:
- My latest portfolio updates
- Rekt Capital has the latest technical analysis for you on the market.
- Rebecca has all of the latest news for you.
- Upcoming NFT drops
- Defi Dad has a tutorial for you on the top 3 passive strategies for ETH holders going into the Merge.
- Jesse has a ton of hot new airdrops for you.
- Hot new token sales.
- Rebecca breaks down this week’s trending coins.
- Jesse has a deep dive for you on Dogecoin vs. Shiba Inu.
And much more!
Unstoppable Domains Interview
For anyone not familiar, what are Unstoppable Domains?
Unstoppable Domains is the largest provider of NFT Domains. NFT Domains are minted on the blockchain and serve as a digital and portable identity across a variety of web3 applications (DApps). Users fully own and control their domain, and hence have full autonomy over their digital identity.
We’re growing quickly and recently closed a $65 million Series A funding round at a $1 billion valuation, reaching unicorn status. We’ll use the funding to fuel product innovation and grow our partnerships in the web3 space as we continue to build a platform for user-owned and portable digital identity.
What are the use cases of NFT based domains?
Unstoppable Domains are packed with utility and can be used as your payments solution, digital identity, decentralized website, email address and more.
- Payments: Use your Unstoppable Domain as your payment address for wallets. Replace lengthy crypto wallet addresses on more than 50 wallets and exchanges. You no longer need to copy and paste complicated wallet addresses each time you send or receive crypto. Simply link your wallet address with your unique domain name (like brad.crypto), then start sending crypto safely and easily! We support over 275 coins & tokens.
- Identity: Use your Unstoppable Domain as your universal username across apps and websites. We’re building out login integrations with hundreds of partners and rapidly expanding this feature. Imagine using your domain name like an SSO when you want to login to a website, send a message, play a game, make a payment, etc.
- Decentralized Web Building: Use your Unstoppable Domain as your Website URL. You can build and host your own website with your domain, for free! These are decentralized, censorship resistant websites. Your website will natively resolve in the search bar in Brave browser, Opera, and with a Chrome extension.
- Email Privacy: We also just launched Unstoppable Email, a privacy-first way for you to communicate with others using your personal email address. Now, you can use your NFT domain as your @ud.me email address. By turning your personal email into an @ud.me, you can: maintain the privacy of your personal email addresses
There is still a lot of skepticism around NFTs in general, why do you think that is?
Unfortunately, “pump and dump” projects and scams have negatively contributed to the space. Many people have gotten burned on the promise of quick returns and treating NFTs as a short-term investment as opposed to looking at the overall utility and long-term credibility of the project and team behind it.
We differentiate ourselves based on utility. Our goal is to have the world’s 3 Billion internet users using a domain everyday as their digital identity because it’s a useful and helpful product that adds value. Our NFTs are accessible to all – they start at $5.00.
What domains have proven to be most popular?
Your identity starts with your name and we are no exception to that rule. To that end, first name, as well as first name + last name combinations are incredibly popular. Dictionary words like “wallet” are also in high demand. Additionally, common crypto-phrases like “wagmi” are also among the most popular and sought after Unstoppable Domains.
Will you be bringing in support for more domain names and chains in the future?
Yes! More to come on that. You may be hearing more about this in the coming weeks 😉
What kind of support for NFT based domains is there?
We have over 300 partners and 2.5 million domains registered worldwide. Unstoppable Domains supports over 50 wallets and exchanges. Send and receive over 275 cryptocurrencies. We also integrate with OpenSea, where you can list and re-sell Unstoppable Domains.
What comes next for Unstoppable?
We plan on Unstoppable Domains becoming the digital identity solution for every internet user on the planet – an identity that’s portable across online spaces. To that end, we’re hard at work increasing the utility of our domains and growing the sorts of partnerships that will put an Unstoppable Domain in the hands of each of the world’s 3 Billion internet users!
Trader Joe’s new AMM: Liquidity Book by Erik
On August 22, 2022, decentralized exchange Trader Joe launched its v2. It is called Liquidity Book, and it promises traders the option to provide liquidity for a specific price range. Another perk is compensation in the form of higher trading fees when there is high price volatility. Both help with offsetting the risk of impermanent loss. It’s clear that Trader Joe has taken a good look at Uniswap v3 and tried to improve on it.
About Trader Joe
Trader Joe is a multi-functional defi platform that includes services like an NFT marketplace. Its decentralized exchange (dex), which is the topic of this article, is in the top 20 dexes. Since its launch on Avalanche in July 2021, it has generated a trading volume of more than $88 billion. Trading fees are paid to both liquidity providers and JOE token holders.
However, Trader Joe found that its v1 design caused its users capital inefficiency and impermanent loss. The v2 is a response to this.
Introducing Concentrated Liquidity: Providing liquidity in a price range
Concentrated liquidity was introduced by Uniswap v3. It allowed liquidity providers (LPs) to take positions in a certain price range for a trading pair. This increases the efficiency with which LPs can deploy (and risk) their capital. It allows them to deploy refined strategies as opposed to just dumping their coins in a pool and hoping for the best.
Like Uniswap v1, Joe v1 was built on the popular x*y=k Automated Market Maker (AMM) design. And following in the footsteps of Uniswap’s introduction of concentrated liquidity in v3, TraderJoe comes with a similar architecture. In Liquidity Book, liquidity is separated into distinct price ranges or ‘bins’. This is analogous to Uniswap v3’s Ticks. (I wonder why Trader Joe didn’t call these bins ‘pages’, to stay in the book metaphor?).
Example of trading in bins
Let’s compare trading between the first and current version of Trader Joe.
- Joe v1: A LP can deposit liquidity into the USDC/ETH pool and the liquidity will be spread over $0 to infinity price range.
- Joe v2: LP’s can set a price range of 1600 to 1700 USDC per Ether in the USDC-ETH pool. The liquidity they provide will only accrue trading fees as long as Ether trades in that range.
The most eye-catching benefit? In v2, the fees will be higher than in v1, where the price range is infinite. According to Joe’s explanation of Liquidity Book, ‘Concentrated Liquidity leads to traders getting considerably better prices with reduced or even zero price impact, even in pairs with relatively low TVL.’
Traders who want to benefit from high fees and who whave conviction in a certain price range can deposit all their tokens into one range, or ‘bin’. Others will opt for a more balanced approach. Depending on their view of the market, they can pick any amount of specific bins, and deposit any amount of liquidity into those bins.
Another benefit that Trader Joe claims the bin structure provides, is reduced or even zero price impact (slippage) of trades, even in trading pairs with small pools. Joe claims that this makes it stand out above Uniswap v3, in which slippage can still occur.
The difference with Uniswap v3: adjusting positions in one transaction
TraderJoe’s core team has apparently had a good look at what could be improved on Uniswap’s v3. They came up with so-called fungible token receipts for assets deposited into pools. These receipts allow traders to easily re-balance positions in one transaction. Whereas on Uniswap v3, for example, it would take several transactions to adjust one position.
This is of course a vital feature for traders who provide concentrated liquidity. As the price moves, they want to reassess and adjust the range in which they provide liquidity. TraderJoe hints at the future automation of this position management, by so-called automated vaults.
Variable Fees to Compensate for Volatility Risk
Especially for volatile trading pairs, providing liquidity comes with a high risk of impermanent loss. That’s the case when simply holding the coins of the trading pair would have resulted in higher returns than putting them in the pool (since the pool gets rebalanced, traders would lose some of their highest returning coins).
A first way to deal with this risk is the above idea of concentrated liquidity: if ETH pumps and goes higher than the top of the range you chose, you automatically no longer take part in that bin of the pool.
Another way to compensate LP’s for the volatility risk is simply by… paying them more trading fees. Joe v2 has an algorithm (the volatility accumulator) that assigns the current price volatility a score. If volatility is high, the fee ramps up to compensate users for costs associated with liquidity provision (see the video).
Conclusion: New generation of AMM’s upon us
The first generation of automated market makers were not great in terms of capital efficiency/ profitability for LP’s. With the new generation of dexes like Uniswap v3 and Joe v2, the option of active strategies could unlock the next level of DeFi adoption. If done with precision, active management of providing liquidity can lead to a huge increase in trading fees. Uniswap v3 has already proven this and Joe’s Liquidity Book builds upon it.
That would mean that the age of passive market making in defi is over. Instead, active strategies – and soon, services that automate these strategies for you – will become the norm.
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.
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- Deep dive Altcoin report & The Trending Coin Report
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See you next time!
Lark and the Wealth Mastery Team
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.