Thread by @JackNiewold

THE SOLIDLY ENDGAME:

But with a nasty price drop over the last 36 hours, a missing founder, and inflation fears around the project what's next?

🧵👇

I'm going to assume you already know what Solidly is, more or less.

But the basics are:

$SOLID is an exchange similar to Curve with both stable and volatile swaps.

Value comes via the ability to direct token emissions, incentivize emissions and trading fees earned.

But $SOLID token price has collapsed: I think there are 3 main reasons.

1. Token inflation:

While investors originally thought that rewards would be strong for about a year, it turns out that Andre Cronje coded $SOLID so that emissions drop drastically after just 10 weeks.

And at the moment, fight for control over $SOLID is basically a fight to direct token emissions.

No emissions, no Solidly war, no reason to buy up $SOLID.

Here's a graph of emissions to show how quickly they drop off.

Week 1: 16 million
Week 12: 150,000

If token emissions drop off by a factor of 1000, and supply inflates so fast, there's bound to be a price shock.

1. The war for who controls most of the protocol is already won, so there's no need to fight over the scraps.
2. There are no longer meaningful emissions to direct

But it's clear that Andre intended for this to be the case--so what's going on? Why is this protocol hyper-inflationary while tanking emissions to zero before summer?

Two theories:

1. Andre wanted a protocol to be the base layer for cheap LP positions

Other AMMS charge 0.25% for LPs and Andre wanted to create a base layer protocol where he could make ultra-cheap LPs ($SOLID charges just .01%)

The rest was about hype and creating value/TVL for Fantom.

With these LPs, devs can create farms on their own platform where they put farm incentives.

KP3R is the first example: Andre would create an LP around KP3R, then incentivize it off-platform.

So maybe he didn't care about the long term success of SOLID, but wanted a base-layer.

2. The system can actually work long-term

Perhaps the combination of base-layer LP protocol, deflationary tokenomics, and continued emissions can actually work.

To use our other example, what if Andre creates $1 billion in daily volume via this base layer.

Well, the owners of SOLID can still collect fees for the LPs they vote on.

In this case, the flows of emissions are still pretty meaningful:

If we assume Solid achieves a market cap based around Uniswap's P/S metrics of around 10, we can assume Solidly is still worth approximately $300-$400 million, or about $3-$4 per token, even w/o emissions.

So market cap may bottom out, then people realize Solidly is worthwhile for the cash flows post-emissons.

And then emissions become valuable again, and able to direct liquidity. The system works again.

That's the LT bull case. But people got spooked from the emissions.

Secondly, we're facing a new threat in a private whale, Roosh, who has accumulated a huge amount of supply just to incentivize his own private liquidity pool.

This bad actor could tip the equilibrium.

https://twitter.com/DeFiAgriculture/status/1499251506339483651?s=20&t=UmWlzfzVrFlMgEm2cejvPw

Lastly, it's looking pretty credible that Andre Cronje, the Solidly founder, is taking a serious, longish-term break.

If Andre is not paying attention to $SOLID, holders might have to wait a minute to get any real value out of it.

Ok, now the good news:

Andre Cronje has been able to establish $FTM as a chain for DeFi pioneers.

I've talked to a lot of founders and investors this week and I assure you there are tons of gigabrains on $FTM.

There's also a lot of fresh capital in $USDC and $FTM.

Perhaps, no matter what happens, there's been a small-cap DeFi Spring brewing on Fantom, one that will become a flywheel and maybe even spread to other chains.

Protocols are looking to use this momentum to create value on FTM apart from Solidly based on hype and new money.

What am I doing in the chaos?

Well, I got a little rekt on $SEX and $WEVE to be honest. Not the worst trades I've ever made, but I've gotten my risk managed for me.

I've accepted that the team at VeDAO can play this game better than me, so I'll just be holding $WEVE for now.

Just a small chunk--I've gotta say that things aren't looking good, and what pushed me over the edge is talking to founders.

They're a bit bearish on $SOLID, so I have to be as well.

Where is my other capital going?

I don't want to shill any of these smaller projects because I haven't done much research on them; if there's interest I'll look into some of them.

(to whet your appetite: I'll be looking at $FSM, $OATH, $RDL, and $BOMB to start out)

Perhaps this will be the inception of an insane, cool, innovative Fantom DeFi ecosystem. That'd be awesome.

But we'll have to wait and see, on that, and on $SOLID.

That's all I've got. Probably not the news you were looking for, but there's definitely reason for hope.

In the meantime, I'm going to take the weekend off. I'll see you all Monday.

As always, give me a follow for more threads on DeFi: @JackNiewold

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