GM, frens! ☕️

“All conditioned things are impermanent” — Dhammapada, verse 277

Autumn has started, and nature is about to make that point for us in the most obvious way possible. The green that looked permanent a few weeks ago will turn yellow, fall away and eventually make room for something new.

Good periods end, bad ones do too and even when life seems stuck in one particular state, it never stays there forever. This just happens to be a very pretty reminder of that.

Here’s what we’re looking at this week:

• 🦀 “The Squeeze”: almost a meta, not yet a real stock squeeze

• 🖊️ Three swaps, one signature

• 👻 Aave V4 and the $17 Billion question

• ⌚️ A pumped token forced Cronos to rewind its chain

Come spend some of the season with us in our Discord 🤠 

“The Squeeze”: almost a meta, not yet a real stock squeeze

The fastest way to kill a memecoin is for everyone to learn the trick behind it. Once thousands understand the play, copies instantly appear and most people arrive just in time to buy somebody else’s bags 💰️ 

That keeps degens constantly searching for the next game. A new animal is no longer enough and neither is putting a familiar joke on another chain. The better meta is one that gives the community something new to push against.

Tokenized stocks may have provided it 🤔 

• These assets follow real companies, but they trade inside small onchain markets where the available tokenized supply can be just a tiny share of the real one. They also keep trading while the stock exchanges behind them are closed, leaving periods when demand can rise but new tokens cannot easily be created.

• So meme communities have started playing with that gap. They pair a coin directly with a tokenized stock, use demand for the meme to absorb its available supply and try to squeeze the onchain price. The larger goal is to make that demand reach the real shares when the issuer buys more of them to create new tokens 🪙 

• The current experiments are still small, but the goal is much bigger. Degens want to see whether enough memecoin buying can eventually force demand into the real stock behind the token.

BONER was a good example 👇️ 

The coin launched on Robinhood Chain and was paired directly with tokenized Hims & Hers stock. Hims & Hers is a telehealth company known for selling hair loss and erectile dysfunction treatments (which explains the name without requiring much further investigation into the community’s creative process) 🥴 

Instead of dollars or ETH BONER traded against HIMS. Anyone entering BONER through its main pool first needed tokenized HIMS, which was then deposited into the pool as the other side of the trade.

As more people bought BONER, more HIMS tokens ended up stuck inside BONER liquidity. At one point, the pool held around 81% of the available tokenized HIMS supply.

• That created a squeeze over the weekend. The real stock had closed at $28.84, but the tokenized version reportedly printed as high as $132.64 on Robinhood Chain because so few HIMS tokens remained available in its normal dollar pool 💵 

• Nothing had happened to Hims & Hers. Memecoin traders had simply cornered most of the small onchain supply while the traditional stock market was closed.

• The supply could not immediately grow because only an authorized Robinhood partner could create more HIMS tokens. To do that, it needed access to a market where it could buy the real shares backing them ✉️ 

Once Robinhood’s overnight stock session opened, new HIMS tokens started appearing. The issuer more than doubled the supply, sold the new tokens into the expensive onchain market and dragged the price back toward $30 within hours 🤷‍♂️ 

The real HIMS stock barely reacted. It traded around $29.41 on Monday, so BONER did not squeeze the actual company or hurt its short sellers. It squeezed a tiny tokenized copy that had only a few hundred thousand dollars behind it.

That sounds like failure, but memecoin traders did not see it that way.

The community proved that a joke coin could corner a tokenized stock, break its price link and force the issuer to create more supply. The final step, creating enough demand for the issuer to buy a meaningful number of real shares, simply was not large enough yet 🪙 

BONER also survived the supply increase. Its price kept climbing after the HIMS premium disappeared, which gave other traders another reason to study the setup instead of treating it as a failed weekend stunt 🤓 

At least a dozen memecoins are also trading against GMEB, Binance’s tokenized version of GameStop stock, on BNB Chain. They include memestock, stockmemes, LONGCZ and BURN. Together, the pools handled about $2.2 million in one day 🤯 

The problem is size.

• All tokenized GameStop onchain was worth about $5.3 million when the numbers were collected, while GameStop itself was worth more than $8 billion.

• A memecoin community might corner the GMEB tokens, but that is still a tiny room attached to a very large building. The onchain price can go crazy without the real GameStop stock noticing.

• Traders discussing the meta already understand that. Some have openly said GameStop is too large and that the better target would be a company worth between $50 million and $250 million. A smaller company with a thin tokenized supply would give the onchain buying a better chance of reaching the real market.

Other communities are testing the same structure. SAYLORMOON reportedly held around 26% of the tokenized Strategy supply on Robinhood Chain. Memecoin pools absorbed about 11% of tokenized Tesla, while an Nvidia paired coin reached around 17% without causing the same kind of squeeze 🥸 

This is becoming a hunt for the weakest float.

From the community’s view, the attraction can be explained. A normal memecoin pump stays inside crypto. Early buyers win, late buyers get dumped on and the rest of the world never notices. Pairing the coin with a tokenized stock instead gives the group something outside crypto to push against. Also adds lore, if you will - you’re basically tying yourself to the whole company that’s behind your stock pair 🤏 

The actual dream is that memecoin demand drains the tokenized supply, the stock token rises above the real share price and the issuer has to buy real shares to create more tokens. If the numbers ever become large enough, the community’s onchain buying could start adding pressure to the actual stock 🙄 

But the community is still treating the whole thing as a successful first test. It found a way to turn memecoin demand into demand for a stock wrapper. Most importantly, it now has proof that the wrapper can be cornered.

Three swaps, one signature

One swap is easy. Buying several assets is where crypto UX usually makes you suffer 😐️ 

Ambire’s Transaction Builder gets rid of that repetition by letting users add several swaps to one batch, review everything together and sign once.

Check out an example that swaps ETH into tokenized Nvidia, Apple and PONS on Robinhood Chain in one go 👇️ 

Batching is one of those wallet features that sounds minor until you actually have to sign and confirm 3 different swaps 🙃 

It works for entering several positions, selling several tokens or adjusting what you hold without approving every action separately. Ambire lets users add as many transactions as needed to the batch, so three swaps are only the beginning.

BTW, Robinhood Chain itself has become a perfect place to show this off. We covered its launch and the first successful month, but activity has since gone much further 👇️ 

Pons, the chain’s main launchpad app, recently generated nearly $6 million in fees during one day as users launched almost 25,000 tokens and traded around $544 million 😲 

Robinhood Chain itself collected about $4.45 million in fees on September 2, putting it among crypto’s leading chains by daily revenue. Nearly 646,000 tokens have already been created through Pons since July, although most of the value remains concentrated in a few successful coins 👀 

Aave V4 and the $17 Billion question

Getting money into a lending market is only half the job. Someone also needs to borrow it, otherwise the protocol has a large pile of capital that is not earning much for anyone.

• Aave has won the first half. It became the main place people deposit assets when they want to lend through DeFi, giving it far more liquidity than any of its rivals 💰️ 

• That has put the protocol in an unusual position. Aave no longer needs to prove it can attract money. It needs to show that more of the money already there can be used without making withdrawals harder or adding risks.

So how do you grow after already becoming the biggest entity onchain? People following Aave see V4 as its attempt to solve that problem 🤔 

• Aave now controls between 42% and 48% of the active loans held across the ten largest DeFi lenders. Its loan book also grew from around $11.1 billion to $12.5 billion during August, with much of that growth arriving near the end of the month 📈 

• Even after that growth, users have supplied close to $30 billion while borrowers are using about $12.7 billion. The gap leaves more than $17 billion available for new loans 💲 

• Some analysts and people in the community describe that money as idle, although the word makes the situation sound worse than it is. A lending market needs spare liquidity so users can withdraw their deposits and new borrowers can enter without sending rates through the roof.

The concern is that some of Aave’s unused capital may be available in the wrong markets. One pool can have plenty of deposits and little demand while another is running short, with no simple way for the two to share what they have 💵 

V4 is supposed to improve that:

The V3 divides deposits across separate markets.

• One market can have plenty of money and weak borrowing demand while another is running short. The capital belongs to the same wider protocol, but it cannot always flow where borrowers want it 🤓 

• Supporters of V4 think its Hub and Spoke system can improve that setup. A Hub holds shared liquidity while separate Spokes set their own collateral rules, risk limits and liquidation terms. Several different markets can therefore reach the same larger pool without all being treated as the same product 🎯 

V4 is already live on Ethereum with three initial Liquidity Hubs. The next test is whether more users and markets actually migrate to it.

People backing the design say Aave’s size becomes more useful when new markets do not have to attract every deposit from zero. A specialized lending market can connect to a Hub and reach existing liquidity while keeping its own risk settings.

That could help Aave support more borrowing without waiting for another $17 billion in fresh deposits. It could also improve returns for lenders if more of the money already inside the protocol finds borrowers 👛 

The cautious side of the community points out that shared liquidity creates new questions, for example if several Spokes depend on the same Hub, bad settings in one area must not be allowed to threaten everybody else. Aave still needs strict caps, good collateral pricing and clear rules over who gets access to each pool 🧠 

Overall the community view is not that V4 suddenly turns every unused dollar into profit. It’s that Aave already has the deposits, the users and a huge lead over its rivals. The next job is making those parts work together more efficiently without weakening the controls that made people trust the protocol in the first place.

A pumped token forced Cronos to rewind its chain

Cronos was sort of an early version of a crypto meta that is still working today.

Not the current L2 landscape as you know it and it was definitely not the first exchange chain either, it sat somewhere in the middle: an EVM compatible chain with cheap transactions, familiar tools and a large company ready to send users into it 🐂 

Crypto.com supplied the name, the wallet connections and the customer base. Ethereum apps could be copied over without rebuilding everything. Yield farms, NFTs and shitcoins filled the chain, while a particular kind of retail “normie” user arrived through the exchange and pushed its early numbers to extreme levels 🪙 

• That formula is still being used. Aforementioned Robinhood Chain is the current example. The official idea may involve tokenized stocks or serious finance, but the first customer usually arrives for a coin with animal pictures and to chase some ridiculous yields 🐸 

• Cronos was probably one of the first chains that showed how powerful that model could be. Its mainnet launched in November 2021 and passed $1 billion in total value locked before the month was over. It had more than 186,000 wallets, 5 million transactions and over 1,700 tokens minted during its opening month 🤯 

The problem is that permanent value doesn’t get created out of thin air.

CRO reached an all time high of $0.8915 in November 2021. It now trades around $0.058, more than 93% below that peak. Cronos currently holds about $264 million in DeFi, with around 2,300 active addresses and $1.85 million in daily decentralized exchange volume when the latest figures were collected.

The chain is not dead. People still use VVS Finance, Tectonic and several smaller apps. Crypto.com continues supporting it and CRO still has a multibillion dollar market value (even though it did have to do questionable things to survive) 🤐 

However it’s for sure a much simpler place than the chain people imagined during 2021. Tectonic alone holds about $121 million, close to half of all Cronos DeFi. When almost half the ecosystem depends on one lending app, a problem inside that app becomes a problem for the whole chain 🥴 

That problem arrived on August 30.

• An attacker targeted TONIC, Tectonic’s own governance token. TONIC had very little market liquidity, but Tectonic still allowed users to deposit it as collateral with a 20% collateral factor.

• The attacker pushed TONIC’s price up by as much as 100 times in about 20 minutes. They then deposited the suddenly expensive tokens into Tectonic and borrowed real assets against the fake valuation.

• The borrowed assets included stablecoins, ETH, BTC and CRO. Onchain researchers estimated the total at roughly $74 million to $75 million 💀 

The mistake was painfully simple. A weak token could be manipulated with relatively little money, but Tectonic’s lending market treated the resulting price as real. Once the attacker’s collateral appeared to be worth far more, the protocol allowed them to empty assets that had actual demand and liquidity 💸 

Tectonic’s recorded value fell from about $121.7 million to roughly $3 million during the attack. The largest part of Cronos DeFi had disappeared in one morning 😶 

Cronos validators responded by stopping the entire blockchain. That froze the attacker’s remaining funds, but it also froze every unrelated wallet, trade and app on Cronos. People who had never touched Tectonic could not use the chain either 🤷‍♂️ 

The network later restarted after validators restored it to a point before the exploit. Almost 11,000 blocks were discarded, wiping close to two hours of chain history. That erased most of the attacker’s balances along with legitimate transactions made during the same period 😲 

Around $6.3 million had already reached Ethereum and could not be pulled back. The rollback kept roughly $69 million from leaving Cronos, and Tectonic’s value later appeared back near its previous level on DeFi trackers.

Crypto.com said its main app and exchange were not affected and customer funds there remained safe. A full account of the incident and its final losses was still expected.

That, of course, restarted the old argument about what blockchain settlement means when a small enough validator group can decide that recent history no longer counts. Users may be happy when a rollback saves their funds. They may feel differently if a future rollback cancels some important transaction they wanted to keep 🤷‍♂️ 

So that leaves Cronos with a question that will outlive the exploit. Once validators show they are willing to erase an attack, every future hack comes with the same question: do we roll this one back too? 🎢 

And if there is no clean rule for choosing then a large app may get rescued while users of a smaller one are told that transactions are final. Legitimate transfers may be deleted because they happened beside the wrong event. What looks like a technical emergency quickly becomes a decision about whose losses matter.

Other worthy reads

“How We Made $10M+ Running an Equity Perps Arbitrage Bot” - CBB:

“RWAs: The next liquidity channel” - Wintermute:

“Memecoins Need a Reputation Layer” - schema:

MEMES

That's all for now, frens.

We'll meet in a week! And remember, the market conditions are temporary, but our commitment to building a better Web3 is here to stay. Thanks for joining us, and we look forward to seeing you back next week. Cheers!

Yours, The 🔥 Team

Brought to you by Ambire: The Only Web3 Wallet That You’ll Need!