August Status Report

Where we've been, where we are, and where we're going.

They often say there is never a dull moment in crypto. I used to agree with that, but after August, I have no choice but to call bullshit. The month definitely got off to a hot start with the whole Tornado Cash thing, but the second half was considerably cooler. There’s nothing wrong with this per se, but it certainly wasn’t the most action-packed month we’ve ever experienced. Maybe that’s the true mark of a bear market. 

However, don’t think for a moment that nothing happened during August. Even at its most boring, crypto is leagues more exciting than TradFi. Between Tornado Cash, Ethereum drama, new PvP arenas, a bear market rally, and Jerome Powell speaking at something called Jackson Hole, there’s more than enough to talk about. 

Welcome (back?) to my end-of-month status report series. For those new here, which is the majority of you, these are the articles in which I provide bullet-point thoughts on various topics from the last month. Hopefully, this is valuable to you; if not, I hope it is at least entertaining.

Let’s dive in.

A Rude Reminder

• The story of the month was, without a doubt, the Tornado Cash (TC) travesty.

• If you have no idea what happened, the TLDR is that the U.S. Government sanctioned TC because criminals sometimes used it to launder money.

• These sanctions made it illegal for U.S. citizens to interact with TC in any way. 

• This prompted big DeFi players to bend the knee and blacklist addresses associated with TC to stay clear of the government’s wrath.

  • Including, most frighteningly, USDC.

• Throw in dusting and the ridiculous arrest of a TC dev in Amsterdam, and you have yourself a full-blown debacle. 

• There have been three strains of thought following the TC sanctions and the government compliance of big DeFi players like USDC.

• The first strain of thought says that shutting down TC was justified because TC was used by criminals and enemies of the US like North Korea, and we need to work on compliance. 

  • This is so fucking redacted it hurts.

  • If you eliminated everything criminals used, you wouldn’t have anything left.

  • North Korea uses the internet. Should we shut that down too?

  • The fundamental problem with this line of reasoning is that it misses the forest for the trees.

  • Censorship is the slippest of slopes.

  • Today it’s TC; tomorrow, it’s criticizing the government (just an example). 

  • If you allow one, you enable the other.

  • I just don’t know why people who think like this are in crypto.

  • Well, I know why. It’s a lot easier to make money in crypto than it is in TradFi. It just sucks that many in crypto are here purely because they see it as a quick buck.

  • I pray we can boot these snakes out before they permanently ruin crypto.

• The second strain of thought hopes that the government will leave crypto alone.

  • In my opinion, this is super naive.

  • The point of crypto is to take away power from the government.

  • Do you really think they will sit by and let that happen?

  • I wish that were the case, but after TC, I don’t know how you can even remotely confidently say it is.

• The third strain of thought wants crypto to prepare for war.

  • Now, this is what I’m talking about.

  • The unfortunate reality is that crypto succeeding is not in the government’s best interest.

  • And thus, it’s not something they will just let happen.

  • If we want crypto to reach its full potential, we need a lunarpunk mindset. 

  • No more hoping the government just leaves us alone.

  • And again, if you’re advocating for FedFi, please just fuck off.

• Ultimately, I see a crypto culture war coming that will go a long way toward deciding our future. 

Ethereum FUD

• A whole gaggle of shit happened with Ethereum this month.

• If you somehow don’t know, The Merge is scheduled to occur in September.

• Many believe it’s one of the most bullish things ever for reasons I’m sure we’re all sick of hearing by now. 

• However, from my point of view, something just feels off with the whole thing.

• Between the constant shilling, PoW fork, possible tech failures, base-layer censorship, staking yields that might be lower than previously expected, and historically low on-chain activity, Ethereum just doesn’t feel bullish, even with the merge coming. 

• It’s just an awful lot of shit.

• Now, it’s entirely possible that I’m being fudded out of the easiest long of all time.

• But can anybody confidently say so one way or the other?

• I know I can’t.

• I will continue stacking ETH because I believe in it long-term, but I will not try to trade The Merge.

• I wish all of you currently long the best of luck.

The Colosseum Returns

• We may have gone another month without real innovation, but at least we got back some good old-fashioned PvP games.

• Really, the entire crypto market is a PvP arena right now.

• The two most prominent examples in August were Dogechain and SudoSwap.

• Dogechain is a meme chain based on Dogecoin and SudoSwap is a decentralized on-chain NFT marketplace that uses an AMM.

• Dogechain and SudoSwap are hot right now, and SudoSwap is genuinely cool, but I wouldn’t trade these if I were you. 

• In a market like this, you shouldn’t trade unless you’re able to rotate between positions quickly.

• This means that ~90% of you should not be trading right now.

• You’re much better off waiting for the market to turn and riding the wave up.

• It’s easier, it’s less stressful, and it’s more fun.

• Take this time to learn and chill.

Fed Kills The Bear Market Rally

• I talked about the little rally we were having in last month’s status report. 

• In it, I pretty much said that the rally was unsustainable because the only thing driving it was a lack of bad news.

• To me, this wasn’t a controversial opinion. 

• There was no on-chain activity, trading volumes were way down, there were no significant innovations that would bring in new people, and stimmy checks weren’t being handed out. 

• But people on Twitter were really saying the bull run was back on because: 

  • Inflation dropped to 8.5%, supposedly low enough for the Fed to pivot dovish.

  • 3ac/Celsius was out of coins to sell. 

• I hope you see how stupid that looks.

• Thankfully, Fed chair Jerome Powell took these people out of fairytale land with his Jackson Hole speech.

  • He pretty much said there ain’t going to be a pivot until inflation is back down to normal.

• I say thankfully because I don’t want another fake rally.

• I want DeFi to build something sustainable. 

• Better security. Protocols that people want to use. A clear consensus around our mission. Less bad actors.

• Until then, keep the prices low. 

• And look, I understand that many people are drawn to the space to speculate.

• But are these the people we want?

Eyes Toward The Future

• I hope you recharged your batteries over August because things are about to get hectic.

• Just look at what’s on the docket for September and soon after:

  • The Merge

  • Arbitrum Nitro/Odyssey

  • Frax’s monster suite of products

  • Protocol native stablecoins (crvUSD, GHO, DPXUSD, Dinero)

  • New ATOM tokenomics

• That’s 5 significant catalysts coming to crypto in the very near future, and I’m definitely forgetting others. 

• I expect next month’s status report to be significantly longer.

Personal Progress

• Last month, I wrote that I would focus more on Twitter than substack.

• My reasoning was that Twitter threads received a lot more engagement than substacks. As someone who doesn’t want to just write into the void, it makes sense to focus on building an audience before grinding my ass off on articles.

• At this time last month, I had ~380 Twitter followers and ~140 substack subscribers.

• My goals were to have 500 followers and 175 subscribers by the end of August.

• Thankfully I reached those goals, as I now have ~1400 Twitter followers and ~300 substack subscribers.

• It was by far my best month for substack subscriptions, even though I released less material than I ever had.

• It goes without saying that I’m going to keep focusing on Twitter.

• My goal for this month is 1800 followers and 425 subscribers.

• Throw your boy a follow and subscribe to help the cause. 

That wraps up this month’s status report. If you enjoyed this, please:

and

Thank you for reading! Till next time…