Miles Deutscher Profile picture
Aug 9, 2022 β€’ 39 tweets β€’ 11 min read
There's a hot new narrative brewing in DeFi.

It's called "Real Yield", where protocols pay out yield to users based on revenue generation.

🧡: My TOP 10 picks to capitalise on this growing sector, and how they could become the pillars of the next cycle. πŸ‘‡
1/ Real Yield is classified as yield derived from the generation of "real" revenue, as opposed to revenue derived from token emissions.

Real Yield operates reflexively: More revenue = more yield paid to users and vice versa.
2/ Thus, a bet on a "real yield" project becomes a bet on its ability to a) accrue new users, and b) increase revenue generation overtime to reward token holders.
3/ But before I get into any "picks", it's important to understand where this narrative stems from.

Let's rewind to 2021, where the most common form of user acquisition was the offering of juiced up APRs in order to attract more TVL (at any cost).
4/ Some examples of DeFi protocols which incentivised heavily via emissions/dilution.

$TIME
$SUNNY
$AXS
$ANC
5/ The truth is, almost all DeFi protocols in 2021 utilised aggressive emissions models in order to attract liquidity FAST.

Why? Because the race was on. Retail interest and greed was at an all time high. Just like investors, projects felt the FOMO and didn't want to miss out.
6/ The problem is, this model isn't sustainable. Projects can only offer artificial yield for so long until they're forced to pivot to sustainable models.

Without that artificial incentive for users to deposit and stake, many DeFi protocols suffered an inventible collapse.
7/ This resulted in many investors getting badly burnt, none more so than $LUNA and $UST.

A combination of PTSD and the flush out of retail following DeFi's subsequent collapse highlighted key flaws in the current DeFi landscape.
8/ a) Emissions were "padding" TVL by incentivising liquidity. Once removed, the "true" value of many chains were exposed.

b) Many protocols didn't have well-designed underlying value accrual mechanisms.
9/ The result? A drastic pivot from "fake" to "real" yield protocols as the market shifted to a more risk-off environment.

This shift is exemplified by the recent growth in perp DEXs, alongside the $ETH ecosystem rally in anticipation of The Merge.
10/ Here are my favourite real yield projects that generate yield via actual revenue generation.

I'll give you the TLDR on what they do, how they generate revenue, and what I think their potential is.
11/ The first category of tokens fall under the "Decentralised Perpetual Exchange" sector.

They offer leverage trading with deep liquidity and low fees, whilst possessing all the positive qualities of a DEX vs CEXs:

β€’ No KYC
β€’ No Counter-party risk
β€’ Security
β€’ Sovereignty
12/ First on the list is $DYDX.

It's the largest and most actively used perp DEX, generating over $321m of annualised protocol revenue according to @tokenterminal.

This puts it in the top 3 of any dAPP by protocol revenue. Image
13/ $DYDX currently centralises this revenue (it isn't paid directly to token holders), but they have plans to change this model in V4, which is launching in late 2022.

14/ There is still significant dilution to come.

Thus as it stands, DYDX doesn't have the best tokenomics out of all its competitors, but... Image
15/ I think the most upside from @dydxfoundation comes from the launch of their own chain on Cosmos.

This flexibility offers them a unique advantage vs other DEXs, and is one of the reasons why I'm bullish long-term.

16/ $GMX

The largest project on Arbitrum ($250m TVL), and 7th largest on $AVAX ($90m).

GMX is underpinned by a unique multi-asset pool that earns liquidity providers fees, facilitating 30x leveraged trading of spot assets with low slippage.
17/ $GMX arguably has the best tokenomics out of any perp DEX.

Staking GMX tokens exposes you to 30% of all platform fees, paid in $ETH. There is also a esGMX model to incentivise "sticky" liquidity.

18/ $GNS

@GainsNetwork_io operates on $MATIC, with its premiere offering "gTrade" recently crossing $15b in trading volume.

It has a sleek UI, great tokenomics, and comes in at a "modest" $60m market cap compared to its peers.

19/ @CertiK gives $GNS a strong rating for security, with an 87/100 Trust Score and 84 community score.

Given the recent exploits in DeFi, it's always nice to know that a project is trustworthy prior to investing. Image
20/ @gnsGoblin breaks down the math with a $GNS price forecast based on revenue models.

With a trading volume of $1b/per day, $GNS would theoretically be worth ~$100 (it's currently ~$2.50).

21/ All three aforementioned DEXs are good long-term bets imo.

This comparison will help you navigate the differences between them, to help you determine where to efficiently allocate capital.

22/ If you want a comprehensive go-to resource to further your understanding, this substack by @alpha_pls is a must-read:

alphapls.substack.com/p/defi-gns-gmx…
23/ $SNX

@synthetix_io is a decentralised synthetics protocol built on $ETH and $OP.

Meaning, you can trade between real world assets like gold, silver, cryptos, EUR, oil & stocks.
24/ You can stake $SNX to earn $sUSD and $SNX.

They generate this yield via protocol fees (generated from the minting/burning of synths).

Read more about this mechanism below:
25/ $SNX is currently generating $100m of annualised protocol revenue, ranking it as dAPP #9 by revenue on @tokenterminal.

Talk about "real" yield. Image
26/ We can also observe that both $SNX and $GMX rank in the top 10 for fees generated, exceeding 7 Day Avg. Fees of $100m across the entirety of the crypto space. Image
27/ $UMAMI

The big innovation here is its USDC Vault, which unlike Anchor, pays 20% in *sustainable* yield, generated from minting GLP and collecting trading fees. Image
28/ They're also launching an $ETH and $BTC vault in the near future.

Here are all the details:

29/ Additional UMAMI resources can be found in @iamllanero's Google Doc.

docs.google.com/spreadsheets/d…
30/ There are many other projects which fall under this narrative, some of which include:

β€’ $RBN
β€’ $BTRFLY
β€’ $DPX
β€’ $LOOKS
β€’ $FXS, $CVX, $CRV

I'll be covering these in a future newsletter.
31/ A few caveats:

β€’ I think there is one misconception that "real yield" is objectively better.

Emissions serve their purpose. Many protocols have successfully acquired many new users and built great communities via emitting tokens to boost APRs.
32/ β€’ Many tokens which originally started with aggressive emissions schedules are gradually pivoting to a fee generation model.

Ultimately, only the protocols generating real revenue will succeed. Hype and inflation is only good for temporary price performance.
33/ So although this list may be what is considered as "real yield" right now, there will be many DeFi protocols which pivot to this model.

Some will fail, as weak underlying tokenomics are exposed.

Some will succeed, as they adapt to their new architecture.
34/ Nonetheless, "real yield" is looking increasingly like the future of DeFi.

Projects which successfully implement features that drive both adoption and revenue generation should thrive over the coming years.
35/ As the space matures, investors will gravitate towards the protocols generating real and sustainable revenue, especially amidst volatile market conditions.

For institutional DeFi to eventuate, longevity and risk-adjusted growth also becomes a key consideration.
36/ I'll be covering more "Real Yield" tokens in the next issue of my newsletter.

Subscribe if you haven't already.

getrevue.co/profile/milesd…
37/ I hope you've found this thread helpful.

Follow me @milesdeutscher for more.

Like/Retweet the first tweet below if you can. πŸ’™
I just released part 2 to this thread, which covers 5 new Real Yield projects, including some hidden gems.

Check it out. πŸ‘‡

β€’ β€’ β€’

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More from @milesdeutscher

Feb 1
2023 is the year of ZK-rollups.

ZK is the future of scaling Ethereum, and with the upcoming token launches of @zksync, @Starknet and @0xPolygon's zkEVM - the narrative is starting to heat up.

🧡: Here are the best released (and unreleased) ZK projects to keep your eye on. πŸ‘€πŸ‘‡
In this thread, I'll cover:

β€’ What are ZK-rollups
β€’ The ZK narrative (and why it's heating up)
β€’ The best released ZK projects
β€’ The best unreleased ZK projects (including airdrop opportunities)

Let's dive in! πŸ‘‡
What are ZK-rollups?

ZK-rollups are Layer-2 blockchain protocols that process transactions, perform computations, and store data off-chain while holding assets in an on-chain smart contract.
Read 47 tweets
Jan 29
2023 is shaping up to be a HUGE year for airdrops.

In recent years, people made up to:
β€’ $50k on $OP
β€’ $30k on $ENS
β€’ $18k on $UNI
β€’ $6k on $APT

But there are many more opportunities around the corner.

🧡: 20 upcoming airdrops that I've got my eye on. πŸ‘‡
There are very little cases in life where you can earn hundreds (or thousands) of dollars for very little effort.

Airdrops are one of them.

And although it may cost a bit of time and patience, in the long run it's well worth it!
This thread will focus on 20 airdrops, which I believe are the "pillars" that you should be aiming for this year.

I'll be releasing more threads on smaller ecosystem airdrops in the future.

This list is in no particular order. Let's dive in! πŸ‘‡
Read 30 tweets
Jan 26
Have been learning a lot about trading recently.

I’m going to be testing my skills (or lack thereof 🀣) in the $GNS trading competition.

It’s live now with $100k in prizes up for grabs.

If you wish to support me, you can use my link to trade: gains.trade/referred?by=mi…
More details about the competition if you’re interested:
To be clear, I split up my portfolio into a few categories:

β€’ Long term investing
β€’ Short-medium timeframe investing
β€’ Active trading

I trade with <10% of my portfolio.

How much you allocate depends on your risk tolerance/goals/skill etc.
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Jan 24
Pantera Capital just released their 2023 outlook report: "The Year Ahead".

It's packed full of alpha.

I read through its 10,000 words so you don't have to.

🧡: Here are the top 10 takeaways. πŸ‘‡
This thread will be broken up into 5 parts:

1. Crypto Market Outlook: @joeykrug
2. State of Blockchain Venture: @veradittakit
3. BlockChain Infrastructure: @_will_reid
4. Structurally Safe DeFi: @chiajy2000
5. @PanteraCapital's 2023 Fund Overview
-- CRYPTO MARKET OUTLOOK by @joeykrug --
Read 34 tweets
Jan 22
Many of next cycle's top performers haven't been released yet.

These projects have potential to 50-100x next bull run.

The next $SOL or $MATIC could be sitting right in front of you.

🧡: Here are the top 13 unreleased projects I'm most looking forward to. πŸ‘‡
In this thread, I'll break down my favourite unreleased layer 1s, layer 2s, interoperability protocols and dApps that I've got my eye on for next cycle.

At the end, I'll give you 4 steps to take advantage, as none of these projects have tokens *yet*.

Let's dive in!
-- LAYER 1s --

1. @SuiNetwork

Sui is a high performance L1 which uses the Move programming language.

It was founded by former FaceBook engineers, who worked on the now defunct Diem project.

Here's all you need to know:
Read 31 tweets
Jan 18
I recently interviewed @hosseeb, Managing Partner at @dragonfly_xyz. I was blown away.

Over an alpha-packed 73 minutes, we discussed:

β€’ The future of L1s and L2s
β€’ Haseeb's top 3 narratives for 2023
β€’ $BTC vs $ETH

and more.

🧡: Here are the 12 most important takeaways. πŸ‘‡
1. 2022's biggest lesson: The importance of paying attention to mechanism design.

"In the long run, you cannot escape mechanism design."

"If you're creating something that doesn't net create value, it's not gonna work, it doesn't matter how big you scale it."
2. Ethereum is superior to #Bitcoin in the eyes of institutions, as it's more ESG friendly.

"If you want a trillion dollar coin, you're not going to get there off the back of retail."

"Ethereum is really the only game in town if you want institutional buyers."
Read 18 tweets

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