Week of November 12, 2021
$MOCHI vs. Tetranode vs. Convex
On November 10th, the Mochi Inu token launched, offering users the compelling opportunity to own a token named after a dog and a dessert, but not after Elon Musk. In tandem, the MOCHI/ETH pool launched, and traded $14.8mn in volume. Thus far today, the pool has traded a little over $8.5mn. On 11/11, the same pool cleared $308.7mn in volumes- that’s #2 most traded on Uniswap v2, behind ETH. Uh, what?
Mochi’s goal as a protocol is to create a synthetic stablecoin – USDM, that is mintable against many long-tail assets, from LP tokens to NFTs. In standard fashion, Mochi then incentivized users to provide liquidity; crypto investors, to no one’s surprise, aped in for a total of $100mn. Now, with $100mn of assets, Mochi was able to mint $46mn of UDSM, which they then used to buy CVX, the Convex governance token. They then used that CVX to vote for incentives for Mochi, which in turn increased their LP yield, which allowed them to increase their USDM borrow. Repeat ad infinitum (or at least until you get caught).
It’s probably also worth noting that the price oracle for Mochi Inu appears to just be a number set in a hot wallet by the founder, Azeem, who has had some bad blood– most notably with whale & DeFi Power Player, Tetranode for his handling of his previous venture, ArmorFi. If you needed any more reason to be suspicious of what was happening behind the scenes, the float for the token is currently listed as one quadrillion, with Azeem still holding the majority of it. If it walks like a rug, and quacks like a rug…
To summarize what just happened. Mochi did as all new protocols do, and offered insane APYs in exchange for liquidity. They then took that LP (which again, they did not own) to mint their own stablecoin. Talk about Ponzi Economics! The weird thing is that, had things gone perfectly unnoticed, this could’ve worked. Literally overnight, the protocol was able to accumulate millions in CVX & was directing tremendous quantities of liquidity to their pools and creating value for it’s LP. Instead, it ended as everything that’s too good to be true must – in flames.
After all the action, the protocol was left undercollateralized by 65%; LPs took a hit, Convex locked their tokens to prevent dumping, and their $48mn position was unable to be unwrapped. Today, Convex created a snapshot to remove all the voting rights of the CVX voting tokens that Azeem locked. Another tally in the column of due-diligence, I suppose.
Wallets & Bitcoin Dividends for all in Miami
As some may remember, Miami was the first city to delve into CityCoins with their creation of MiamiCoin. Theoretically, through Miamicoin, buyers, stakers, and miners should be able to influence and invest in their city.
The way the system works is that miners bid STX – Stacks – for the ability to mine each block of Miamicoin. For each block, a miner is randomly selected, weighted by total STX spent. The city receives 30% of STX mined in a custodied wallet, and the rest is distributed to the protocol as rewards. Not bad!
It gets better. Yesterday, the mayor of Miami, Francis Suarez, announced live on Coindesk that they would be taking $20mn of the initial Miamicoin to invest and stake Bitcoin. The goal is to ultimately create wallets for each resident, who would then be airdropped from the city’s holdings.
Regardless of your stance, I think this should be seen as a win-win for everyone; Movements like this help to legitimize crypto-assets in the mainstream, generate a treasury that is reinvested into the broader ecosystem, and begin to offer something that looks kind of like the beginnings of inflation-protected UBI. Now that’s pretty cool.
BAYC Live on Jimmy Fallon
In NFT news, Jimmy Fallon announced this morning that he is now the proud owner of a Bored Ape profile picture. I’m not sure if this is the single most bullish signal I’ve seen this week, or if its peak bubble behavior, but either way- full steam ahead.
Speaking of Bored Ape Yacht Club, yesterday, a single wallet swept the floor in a massive 5 NFT purchase totalling over 160 ETH, or just shy of $750,000.
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