Hey anon,

A week back, we talked about “smart money” and how you can make profitable investment decisions by keeping track of smart money accounts. 

Smart Money refers to investors with significant expertise and resources capable of making highly informed decisions. It includes:

• Institutional giants, funds, and influential whales.

• Individuals excelling in trades, yield farming, and liquidity provision, identified through real-time on-chain data analysis

As explained in the previous newsletter, tools like Nansen and ChainEDGE helps you identify smart money activities and see the coins they are mostly trading in.

In today’s edition, let’s unearth and analyze some of the coins these smart money accounts have been trading.

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Market Insights

Following the recent Dencun upgrade for Ethereum, transaction fees have decreased by an average of four times. Consequently, the amount of ETH burned has been reduced, reversing its status as a deflationary asset. 

• This shift back to an inflationary model contrasts with the trend observed after the 2022 Merge, which transitioned Ethereum from proof-of-work to proof-of-stake. 

• The Merge, along with the London upgrade, led to a decrease in ETH circulation by burning transaction fees. 

• However, the Dencun upgrade, which introduced "danksharding" to enhance block storage, lowered fees but disconnected the amount burned from network activity. 

• As a result, ETH supply has increased by 400K tokens since April, marking a significant departure from its previous deflationary trajectory.

Solana is rapidly catching up to Uniswap in terms of fee generation. Over the past year, Uniswap collected around $751M in fees, averaging $14.4M per week. 

• In comparison, Solana generated approximately $185M in fees, or $3.6M per week. 

• Recently, Solana's weekly fees surged to about $10M, closely approaching Uniswap's $12M.

Major Smart Money Moves

Using Nansen, let’s examine the major smart money moves made over the last thirty days.

Some interesting observations to be made here:

#1 Restaking and Liquid Staking Reigns Supreme

Half of the tokens in this screenshot are either LSTs or LRTs. That just shows the mentality of the major smart money addresses as of right now. Instead of pouring money into risky new assets, they are quite content with siphoning liquidity into liquid staking and restaking protocols. It looks like capital efficiency is the theme of the month!

As per DeFiLlama, the restaking and liquid staking space accounts for a staggering 78.12% of the overall TVL. 

We believe that the restaking sector will continue to grow simply because it is too alluring for whales that have substantial capital to stake on multiple networks and earn airdrop points for future allocations.

#2 SAFE and sDAI Leading the Way

Safe and sDAI have enjoyed substantial capital inflows over the last 30 days (over $27M and $22M, respectively). Let’s see what’s going on with them.

SAFE

SAFE tokens are designed for governance within the SafeDAO (a DAO formed by digital asset management platform called Safe - formally known as Gnosis Safe) ecosystem. Token holders can vote on proposals that affect the development and operational decisions of the Safe platform. This gives them a direct influence on the future direction and strategic decisions of the project.

Initially, SAFE tokens were non-transferable to ensure that only long-term stakeholders could influence the platform’s direction. In March 2024, they were made transferable, offering increased liquidity and broader participation, attracting more investors.

The structured approach SafeDAO took in aligning on operating logic before enabling token transferability has generated positive sentiment within the community. The heavy lifting and collaborative efforts from various stakeholders have created a strong foundation for the project, which attracts more participants. Plus, listing on exchanges like OKX helped increase visibility and accessibility.

Since April 23, the SAFE tokens have experienced daily trading volume of at least $10 million, a testament to its demand.

What about institutional holders? Here are the institutions that have purchased at least a million SAFE tokens.

Do note that both Tiger Global and Blockchain Capital were major investors in Safe.

SAFE is currently trending below $2. 

With a strong smart money presence and a relatively low entry price point, SAFE could be a great investment opportunity.

sDAI

Savings Dai (sDAI) is an ERC-4626 representation or wrapper of DAI within the Dai Savings Rate (DSR) module. sDAI allows users to deposit DAI and receive the yield generated by the Maker protocol while retaining the flexibility to transfer, stake, lend, and use it in various ways.

The circulating supply of DAI has two main components: the actual outstanding supply from mints and burns on the network, and the supply deposited into the DSR. When DAI is deposited into the DSR, it is burned to mint sDAI. Conversely, when withdrawing from the DSR, DAI is minted, and the user receives back the deposited amount plus accrued interest.

This system has led to a downward trend in the raw circulating supply of DAI because people burn DAI to deposit into the DSR, resulting in sDAI. The DSR has become popular due to competitive interest rates, which were raised to 8% in August 2023, causing a significant increase in DAI’s supply. However, this high rate triggered an automatic drop to 5.8% as over 20% of DAI was parked in the DSR within just two days. To sustain the DSR, MakerDAO's founder proposed a further rate reduction to 5%, which was implemented.

Despite the 5% DSR still being attractive, other yield opportunities, such as USDe with a 15.9% yield, have created competitive pressure. In response, MakerDAO increased the DSR to 15% on March 9, 2024, leading to a surge in DAI’s supply as users rushed to capitalize on the high yield.

sDAI's popularity stems from its ability to provide users with a high yield on their DAI deposits while maintaining flexibility in usage. The competitive interest rates offered by the DSR make sDAI an attractive option for those seeking stable and profitable yield opportunities in the DeFi space.

#3 Why Is ZENT So High Up?

GuildFi rebranded to Zentry in April 2024. Zentry aims to build a super platform integrating games, entertainment, and lifestyle, leveraging the power of players, AI, and Web3. It has invested in projects like Xai, Memeland, and Ronin and plans to integrate them into its ecosystem.

Rebranded in April 2024, Zentry introduced a new native cryptocurrency, ZENT, replacing the original GF token. ZENT, an ERC-20 token, supports value accumulation, access to features, staking rewards, and governance participation.

Zentry announced a GF to ZENT migration, allowing holders to convert at a 1:10 ratio until August 25, 2024. Tokens on centralized exchanges were automatically converted on April 25, 2024, with staked GF tokens also being automatically converted.

The rebranding and conversion ratio explains the elevated smart money volumes that ZENT has experienced over this part month.

In November 2021, Zentry (then known as GuildFi) completed a $6 million seed round, led by DeFiance Capital.

As such, it’s no surprise to see that DeFiance Capital is overwhelmingly the largest holder of ZENT in the market.

#4 What Are COMP and PEPE Doing Up There?

COMP

It’s surprising to see an old-school DeFi token like COMP up there on the list. Sure, aETHwstETH is technically an Aave-wrapped coin, but it still has the restaking element. What’s COMP doing up there?

The overall TVL has also remained quite stable. So, there is no injection of liquidity coming in.

Plus, the amount of COMP held by smart money holders has steadily decreased as well between May 2023 and April 2024.

However, there is a slight jump in the balance held between April 26, 2024, and present. 

Regardless, it’s difficult to see why COMP is being traded and held by smart money addresses.

PEPE

PEPE is still going strong, with the price recently reaching a new all-time high despite broader market turbulence.

This impressive rally has also caught the attention of Smart Money traders, who have moved nearly 250.5 billion PEPE amid the token’s rise. The substantial buying pressure and significant trading volume, which increased by 280.38% to $2.11 billion in 24 hours, have propelled PEPE into a bullish stage.

However, technical analysis traders have noted that PEPE’s relative strength index (RSI) indicator has crossed 70.

This indicates that the memecoin is currently overpriced and a pending correction is looming.

#5 ONDO and RWA

Just shy of $500M in smart money balance, ONDO has consistently been one of the best performers in the real-world assets (RWA) sector.

Ondo Finance enables the tokenization of RWAs like real estate, commodities, and art, allowing investors to access fractional ownership of traditionally illiquid assets. This diversifies portfolios beyond typical crypto assets. It has partnerships with over 10 DAOs and commitments from four stablecoin issuers (FEI, FRAX, UST, and RAI) for new liquidity. 

Supported by Pantera Capital, its not surprising to see that Pantera is one of the biggest holders.

Over the past month, DCG picked up about a million of this coin. In fact, DCG subsidiary, GrayScale Research has also been writing about ONDO.

On March 27, 2024, Ondo Finance enhanced its US Treasury-backed token (OUSG) by transferring $95 million of assets to BlackRock's tokenized fund, BUIDL, enabling instant settlements. Previously, OUSG was backed by BlackRock's iShares Short Treasury Bond ETF, which only traded during traditional market hours. 

This shift allows for instant settlement, significantly improving the usability of OUSG as a store-of-value and collateral asset. This transition also pushed the trading volume and price through the roof.

While the daily volume has since gone down, it is still trending between $100M and $200M. With over 6 billion tokens still left for unlock, ONDO could see immense amount of liquidity entering the market.

Individual Smart Money Investor Moves

The market has been in a peculiar state lately. Prior to Roaring Kitty's return, no definitive narrative dominated the market. Instead, sections of the market have experienced brief outbursts, but nothing sustained as we had seen over the last six months, where there were clearly defined narratives with large amounts of capital rotating between different sectors.

Coupled with this, recent airdrops such as FriendTech were also muted. Furthermore, all the hype surrounding the halving and the promise of runes has been subdued, with all rune collections trending down. Despite these market conditions, let's explore the moves made by individual smart investors during this period.

Reviewing smart money holdings over the last 7 and 30 days reveals significant accumulations in Rlb, Gala, and Rbn. Interestingly, many smart money traders appear to have anticipated a rotation into Pepe, as the table looks very different from 30 days ago. Currently, nearly $28M is cumulatively invested in Pepe according to ChainEDGE and its analysis of smart money individuals.

Notable holders of Pepe according to ChainEDGE include:

• 0xaf2358e98683265cbd3a48509123d390ddf54534, holding around $29M worth of the coin.

• 0x64aec4326d32499e9d38a40e22bbab1f2b74a848, with holdings currently valued at $500K having profited significantly despite a smaller stake.

• 0xcbfefaafacf7822458250c19755401edb1875710, holding approximately $230K worth of Pepe.

On that note, which of the memecoin chains is winning out, Solana or Base?

According to ChainEDGE, trading volumes on Solana continue to remain strong, surpassing those on Base by a significant margin. Meanwhile, volumes on Base continue to fluctuate. Base appears to still be finding its footing with its community and the memecoin sector, with most of the trading activity concentrated on Solana. 

Other notable memecoin developments include the explosion of GameStop-related coins. Let’s break it down.

The resurgence of Roaring Kitty on X, renowned for instigating the GME short squeeze in traditional markets and known as one of the most successful retail traders in history, could potentially ignite another memecoin season. During the 2021 bull market, a massive wave of retail investors entered the market following the GameStop trade, causing coins like Doge to go parabolic.

Interesting insights from GCR from 2022 related to the GME frenzy, which could lead to a memecoin hypercycle. 

Below is the post made by Roaring Kitty on X after three years of silence, which started the recent market frenzy with GME.

The hub for GameStop-related memecoins has been Solana, with coins such as Kitty, AMC, and GME leading the way. GME has seen about $100M in 24-hour trading volume since the return of Roaring Kitty. The analysis by Bubblemaps below highlights the incredible returns made by traders in this narrative.

Another interesting phenomenon to note is that these three coins were all created within the last 108 days. Did someone anticipate this run?

Notable wallets that caught the Kitty, AMC, and GME trades early include:

• ZBwRzrcjtUQcbPrq45XueCpyp6boBqewhxfVtDkXbSN, realized significant gains over the last few days by trading Solana memecoins, particularly those centered around Roaring Kitty.

• 4V91ZLynwdwXh9rAP8iF1LCqoQ5j4ShyZSpt6jHwo1bm, this trader profited a few hundred thousand dollars by trading AMC on Solana.

• LJd8UF1igi7RuYUm2Bj6Y9V8Pbdos2vW6wyD84pDwwT, this wallet also saw substantial six-figure gains from trading these coins.

Moving on,

The cat coin Michi has seen a remarkable rise in market valuation after being mentioned by Ansem. According to ChainEDGE, the traders who benefited from the pump and accumulated significant holdings include:

• FC3nyVqdufVfrgXiRJEqgST1JdJSEBEz6a9KoBfFP7c4, with holdings around $4.5M.

• CBRvUc4qKowpE6k1qfsZyvTU37xtVncvk2xr7qAYPbiP, with holdings around $2.3M.

• Dt2oQeGqcHhWz8f3oQWVUGnZwN9vBeXvk7A4F4sj3qJm, with holdings valued at $1.3M.

Not only have memecoins been experiencing significant movements, but SocialFi has also been gaining traction recently. Fantasy Top, a rising SocialFi application, has caught attention as a card game featuring prominent crypto influencers. 

Additionally, other SocialFi tokens like Friend, Degen and OX have seen gains. Degen, in particular, serves as the main proxy token for Farcaster and has been influenced by the outcomes of Farcaster's recent conference. Meanwhile, OX, the token for Ox.fun, is gaining momentum as Su Zhu and Kyle Davies explore the speculative nature of crypto.

In other news, Trump Coin experienced a significant surge, leading the memecoin market after Donald Trump's endorsement of crypto. Following his announcement at a rally where he expressed support for crypto, Trump Coin saw a nearly 90% increase over the last seven days. and a 74% rise over the month. It now has a market cap of $340M and a 24-hour trading volume of around $20M.

Major holders of Trump include traders such as GCR, and others such as: 

• 0x3216c586b6e682fc5cd41ddc2abef6a0c71d22c3, a very noteworthy wallet, apparently belonging to GCR, which owns around $7.5M worth of Trump.

• 0x88529d2289d47e9339938f25f2e56a33c91671cb, holds roughly $2.5M.

• 0xcbb26213b1b10969f9e86fdef4fd05f6f988e672, has seen impressive gains from this play, with their holdings valued at around $850K.

• 0x8c453db3606c218eaff262fa3908a1d3c1b18eba, another noteworthy trader who successfully traded the Trump narrative, with holdings valued at about $550K.

Wrapping Up

Smart Money examination is always a great way to understand how the big brain degens and institution players are thinking. There are a few observations we can make from whatever we have seen so far:

• Restaking and liquid staking remain popular and strategic plays for investors, ensuring yield stacking and opening avenues for future airdrops.

• SAFE has garnered significant attention since enabling transferability, while MakerDAO has evolved with the times and maintained relevance with sDAI. It will be interesting to observe how interest rates for MakerDAO change with the implementation of its Endgame update.

• ZENT has attracted liquidity largely due to GuildFi’s migration. It will be interesting to see if this inflow is sustained. However, given DeFiance Capital's close involvement with its funding and operations, a significant token dump seems unlikely.

• PEPE has defied market logic, reaching new all-time highs and attracting significant interest from smart money. At this point, PEPE could be considered the most important memecoin in the market.

• ONDO is championing the RWA sector. While RWA gained some momentum earlier this year, it hasn’t attracted as much liquidity as many expected. However, with smart partnerships and solid tokenomics, ONDO has remained consistently strong.

• One defining aspect of this cycle is the prominent role memes have played. In previous cycles, meme tokens were a niche sector that capital would briefly rotate into before moving on. 

• However, in this cycle, meme tokens have consistently remained a major focus. The primary change has been the platforms where these memes are traded, whether it be Bitcoin, Base, Ethereum, or Solana.

• Furthermore, this sustained interest in meme tokens reflects a broader cultural shift within the crypto community, where humor and internet culture have become intertwined with investment strategies. 

• This trend highlights the evolving dynamics of the crypto market, where social media influence and community sentiment significantly impact trading behaviors and market movements. The attention economy has become one of the defining features of the crypto landscape, often overshadowing traditional fundamentals and the practical use cases of different cryptos.

That wraps up today's insights! We hope you enjoyed today’s issue! Till next time anon.

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