The Phenom Crypto Letter

GM,

Never a dull week in crypto. Even with the relatively flat market we saw a bunch of big airdrops and drama. I’m excited to see the halving this month and to see who else does airdrops before we get into summer. These big airdrops inject a ton of liquidity into the space and will continue to drive price action across alt coins. I am currently tracking the potential EigenLayer. That airdrop will pump money into the ETH space and we want to be positioned for ETH based alts to pop!

Thanks for being here this week and following the crypto space with us!

Cheers,

Will, Eric and the rest of the crew at Phenom Ventures

What we’ve got for you this week:

• What is going on w/ $SOL? 🤔

• Eric’s take on navigating gold and crypto 🎥

• BASE’s TVL explodes 💣

Market Rundown

Crypto attention is rising. YouTube crypto view are at their highest level since late 2022 indicating that “retail” is starting to trickle back into the crypto space. Overall, big caps have rebounded a slight bit from their correction and we are seeing positive trends going into the halving but overall the market has been fairly flat week over week. Most volume has been driven by hyped airdrops (Wormhole/Ethena) and Solana spam. Solana has had a rough week with transactions failing on a widespread scale. We will explain that more in depth later in this weeks letter. Fear & Greed is down to a slightly more reasonable 75 and crypto VC money is starting to flow again.

Top Movers

• (-) Wormhole ($W) -38% After a big run up from the token launch hype price action is coming down and consolidating.

• (-)Jupiter ($JUP) -15% Jupiter has been showing weakness on the Solana drama this week.

• (+) Nervos Network ($CKB) +88% CKB is

  surging this week after the launch of an extension protocol designed to enhance compatibility with Bitcoin

• (+) Ethena ($ENA) +47% Ethena is a top gainer again this week as it continues price discovery following its token launch.

What We Are Reading This Week

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The Minefield: Investing in Gold and Crypto

ThorChain's $RUNE Tokenomics Breakdown

If you are a Phenom Premium Member you will hopefully remember us recommending $RUNE last summer at $1.5. We love Rune particularly in a bull market because of the tokenomics. The tokenomics are designed to ensure that Rune is an integral part of the ThorChain ecosystem and value is driven to the token. Lets dive into how it works.

Utility and Demand Dynamics

RUNE tokens are essential for liquidity providers and stakers within ThorChain, unlike Uniswap’s UNI token, where value and platform activity are decoupled. ThorChain’s usage spikes directly feed into RUNE's demand, making it pivotal beyond governance, with its value tightly bound to the network's fortunes.

Supply Snapshot

A rigid cap limits RUNE's total supply at 500 million, with 60% currently active in the market. At a $4.7 unit price, RUNE's market cap nears $1.4 billion, with potential to hit $2.3 billion.

Inflation Insights

Initially distributed at genesis, RUNE's inflation is a controlled mechanism to fuel network growth and reward participants. Despite a starting APY of 30% dwindling to 18%, future aims target a 2% APY, focusing on fee-based rewards for long-term sustainability.

Burning and Minting Mechanics

ThorChain’s unique loan system, offering interest-free and indefinite terms against native token collateral, influences RUNE's supply. Loans opening decrease, and closing increase RUNE circulation, with the current trend showing a higher burn rate, indicative of closing loans or RUNE's appreciating value.

ThorChain has built a great product with solid tokenomics and achieved product market fit. If they can continue to gain users the protocol should be highly successful during this cycle.

What Happened on Solana this Week?

Solana faced unprecedented congestion, with regular users struggling to execute transactions, challenging the notion that only bots suffer. The $ORE token launch on April 2 exacerbated this, as participants flooded the network, trying to earn rewards by solving cryptographic puzzles. This led to a surge in transactions, far exceeding Solana's daily capacity and causing a spike in failed transactions, with many not even reaching the blockchain.

The root issue is Solana's negligible transaction fee, allowing spam to proliferate. ORE miners exploit this, sending countless transactions to mine rewards, thus overwhelming the system. This spamming activity has choked network bandwidth, leading to legitimate transactions being frequently dropped. The situation has sparked a debate within the Solana community on the way forward, with suggestions ranging from technical network improvements to economic measures.

One proposed solution mirrors Ethereum’s EIP-1559, which adjusts transaction fees based on network demand, potentially reducing spam by increasing the cost of transactions. Implementing such a mechanism in Solana could alleviate congestion by prioritizing genuine transactions over spam. The ongoing discourse highlights the need for a balanced approach to ensure network efficiency and user fairness in Solana's evolving blockchain ecosystem.

BlockBuzz™️

Quick Hitters from the week

• Solana Faces Transaction Troubles: An uptick in failed transactions raises concerns about the network's stability and performance.

• Bitcoin's 2024 Halving Potentially Transformative: Predicted to introduce significant shifts in the cryptocurrency's economic structure and market perception.

• Ripple's Stablecoin Challenge to Tether and USDC: Announces entry into the stablecoin market with a U.S. dollar and short-term Treasuries-backed token.

• Galaxy Digital's $100 Million Crypto Venture: Prepares to invest in early-stage crypto companies, signaling strong confidence in the sector's future.

• Base's TVL Soars to $4 Billion: Its transactions per second rate eclipses that of Ethereum, marking significant network growth and activity.

• 1inch Launches Web3 Debit Card: Collaborates with Mastercard and Baanx to bridge traditional finance and decentralized finance.

• TON's Unique $5 Million Incentive: Introduces a palm-scanning program, steering away from traditional engagement metrics to encourage ecosystem participation.

The Twitterverse

A collection of the most interesting stuff on Crypto Twitter this week

Decent framework, using APT as an example, for assessing a project to invest in that has early investor token unlock overhangs.

Good reminder from DC. Always double check the email address came from the real domain and check the real domain/discord/telelgram for airdrop info. DO NOT click a link in a random email.

WAGMI

For the Crypto Culture

It be like that though

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