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HEALTH, WEALTH, AND HAPPINESS

July 25, 2022

"He who gives while he lives also knows where it goes."

- Percy Ross

"Fee Switch" Design Space and Next Steps(Uniswap.org): As Uniswap is one of the assets in our Future Winners Portfolio, we watch new UNI innovations closely... and this is a big one.

The TLDR summary is that Uniswap has a "Fee Switch" in its code that, if enabled, would allow UNI investors to begin sharing a portion of the fees from Uniswap transactions.

Currently, all fees are given to the Liquidity Providers, or LPs, that make Uniswap trades possible. These fees would be taken from their cut, and go to UNI holders.

For UNI investors, this is potentially a huge deal, as it would be like receiving ongoing dividends. Whether this is in everyone's best interest is up for debate (LPs could leave Uniswap in protest).

The proposal is to test out the idea on a subset of Uniswap trades which would generate a minimum of $1M in fees per week. After some drama, this proposal recently passed the community vote.

Investor takeaway: Although the "Fee Switch" is not guaranteed, token holders may soon be enjoying more "dividends" in the form of Uniswap fees, which means it could be a good time to think about buying more UNI.

Here's a look at Uniswap's daily revenue (green bars) and active users (red line) over its history:

Courtesy Token Terminal

Investor takeaway: A product like Uniswap will mirror the crypto market, and specifically the DeFi market. (Note the peak during the "DeFi Summer" of 2021.)

That said, even with the "Crypto Winter" of 2022, Uniswap is still generating fees of $1 to $2.5 million a day.

As the leading DEX, we still believe it's a great long-term buy -- and the new fee structure is a bold experiment that could profit investors handsomely. (Can you imagine your bank sharing service fees with its customers?)

Hi everyone,

With Ethereum's Merge now locked and loaded for September 19, I keep hearing people repeating the question, "wen flippening?"

For those of you not on the up and up of crypto slang, the question translated to normie language is, "when will the total market cap of Ether surpass the total market cap of bitcoin?"

Even though there's no guarantee this will ever happen, just looking at the numbers it does seem like this event is getting closer by the day.

The Chart

Here's the graph that shows the respective market cap of the two market-leading coins. Ether in red and bitcoin in blue. (Click the chart to see the original)

As we can see, the two lines did come incredibly close to convergence circa June 2017, with only about an $8 billion difference between the two metrics. Of course, that was back when Ether's total value was about $30 billion. At that time, bitcoin's respective value was about 26% higher.

Since then, bitcoin has been clearly leading with its market cap often six or seven times that of Ether. Even though the two tend to move in tandem, as stated above, the lines have been getting closer lately. Today, there's a total difference between the two of $243 billion, or about 129%.

In order for the flippening to happen anytime soon, it would require Ether to more than double while bitcoin stayed steady, or some similar unlikely variation in price movements.

The Merge Trade

In my humble opinion, this upgrade to the Ethereum network is far overdue and way overhyped. However, the change to monetary policy, which is unrelated to the technical changes but has for some reason been bundled into The Merge, is quite significant indeed.

In short, the tokenomics of the Ethereum network are about to change drastically. Rewards for keeping the network secure will be reduced by up to 90%. That means that the issuance of new Ether produced by each block will be significantly less than the amount being burned, and the network will go from an inflationary to a deflationary model overnight.

With that in mind, it's no wonder that Ether is up more than 70% since the June 18 low, whereas bitcoin is only up about 25%. Of course, The Merge itself is an extremely risky event and any number of things can go wrong. As always in the markets, higher risk can equate to higher returns, and they don't call it risk because it's fluffy and safe.

Have a wonderful week ahead.

Best regards,



Mati Greenspan

Analysis, Advisory, Money Management

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