What Should You Know About Gains Network?
Breaking Down Gains Network | Balaji's $1m BTC Bet | Banking Crisis
GM Intels, this is your Daily Bolt briefing.
Today's briefing includes intelligence from Balaji’s recent twitter space with Robert ₿reedlove, in which he provides more context for his alarming claims of hyperinflation and doom in the west, and most intriguing of all: his bet that BTC will hit $1m in 90 days.
Today we bring a slight deviation in programming: instead of your rounds of research, we have provided a preview of our most recent project breakdown: Gains Network.
While most breakdowns are for paying members, we continue to release breakdowns for free users with the goal being to provide you with all available information about a project, in an organized report complete with graphics, links, and live data feeds from dune, tokenterminal, and more.
Over and out.
Breaking Down Gains Network
Brief Overview: Gains Network is a decentralized leverage trading platform. Liquidity providers deposit funds into the protocol and earn revenue from trading fees executed by traders.
Here are some key takeaways from our report:
gTrade
gTrade is the leveraged trading platform offered by Gains Network.
It is a decentralized perpetual futures exchange where users keep full custody over their own funds and can trade crypto with up to 150x leverage, stocks with up to 100x leverage, forex with up to 1000x leverage, and indices with up to 35x leverage.
There is no order book or liquidity for each pair; instead there is a single gDAI vault for all listed trading pairs.
DeFi Subsector
Gains Network uses a synthetic architecture that makes the platform more capital efficient than other competitors in the decentralized leverage trading space.
This allows for the execution of trades with low fees and a wide range of leverage and pairs: up to 150x on crypto, 1000x on forex, 100x on stocks, and 35x on indices.
Gains Network can be classified as a real-yield project.
Whether you provide liquidity to the DAI vault, stake GNS, or provide liquidity to the GNS/DAI pool, you are rewarded in DAI.
GNS NFTs
Based on rarity attributes, users can enjoy benefits such as reduced spread when trading (simply by holding the NFT in your wallet).
Users also have access to run a bot that earns rewards from executing limit orders and liquidations (setup guide), and the ability to boost rewards by staking up to 3 NFTs.
GNS NFTs offer different levels of boost rewards for LP rewards and single staking vaults.
Risks
Prior to the updates that were made in December 2022, gToken vaults had problems in terms of: Incentives alignment. There are no incentives for stakers to take on the risk of supplying extra liquidity in times when the vault goes undercollateralized.
Efficiency. When the vault collateralization reached 130% and the protocol began buying and burning GNS, it was often frontrun when the buys were substantial. This means that an individual could accumulate in anticipation of the protocol’s market buy and then sell it to gTrade for an arbitrage profit.
Composability. Liquidity contributions are not tokenized, meaning that when stakers deposit DAI they do not get a “receipt” token that they can use elsewhere to access extra liquidity.
Roadmap
Gains Network has since updated that they no longer have a roadmap as they noticed that making promises usually does not end well with the rapidly changing environment of crypto.
Some of the features in their previously announced roadmap include: Zk Rollup Deployment (ETA was Q4 2022). In touch with Polygon regarding their Zk solutions.
Social Features (ETA was Q4 2022). To allow traders to share/discuss ideas.
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Note of the Day
₿reedlove Twitter Spaces - $1M Bitcoin Bet w/ Balaji Srinivasan
In this Twitter Spaces from Robert ₿reedlove, welcomes Balaji Srinivasan to talk about the banking crisis, his reasoning for the $1m bet that 1 Bitcoin will be more than $1m in 90 days, and more!
Read our notes below to learn more.
Mini Essay on Banking Insolvency
Central banks, major banks, and regulators are aware of insolvency for over a year.
Not a typical fractional reserve situation; banks lack assets for withdrawals.
Unrealized losses are hidden by banks using accounting tricks.
The Fed sold bonds to banks, then devalued them, causing massive losses.
Banks hid losses using hold-to-maturity classification, maintaining regulatory appearances.
Insolvency was discovered during the bank run, initiated by a buried footnote in a financial filing.
Hundreds of insolvent banks; may result in greater interest in Bitcoin as an exit strategy.
Chaos in the Banking Sector and the Rise of Central Bank Digital Currencies (CBDCs)
The decision to monetize debt through money printing will cause bank runs to emerge.
The unexpected strategy may result in chaotic consequences.
Small banks face bankruptcy risks, with larger banks acquiring them.
Stealth nationalization occurs as big banks utilize Fed loans for acquisitions.
Potential outcomes: hyperinflation, CBDCs, and loss of small banks, leading to a China-like state.
During risky times, people may favor CBDCs with government protection over commercial banks.
Large-scale bond devaluation crashes local banks and erodes trust.
CBDCs may enable government control and restrictions over specific industries.
Possible emergence of Operation Choke Point 2.0, targeting controversial sectors.
Chaos could allow central banks to gain more control over monetary policy and citizen transactions.
Government Money, Inflation, and The Future of Currency
Govt money is not guaranteed; may lead to a financial crisis.
Practical freedom entails transaction freedom.
CBDCs can control and limit transactions.
High inflation/interest in Global South; deflation/currency devaluation.
Gold and Bitcoin may gain value in a financial crash.
Social media and Bitcoin offer alternative finance/info sharing.
The US govt may struggle to block crypto exits.
Reevaluation of USD as the reserve currency is possible.
America may remain strong despite the currency collapse.
The distinction between Americans & US govt clearer during crises.
Central Bank Actions and the Impact on the Economy
Central banks purchased $9 trillion in government securities and real estate post-Global Financial Crisis until early 2022.
A massive asset bubble formed without a major impact on CPI.
Potential for deflation as the fiat bubble shrinks.
Introduction of BTFP, a program similar to quantitative easing.
Insolvency of banks (SVB, Silvergate, Signature, Credit Suisse, First Republic) signals financial system concerns.
Possible digital "Pearl Harbor" scenario with surprise devaluation by the Federal Reserve.
Worst bet in 2021: long-term US financial health; worst bet in 2023: short-term US financial health.
Bitcoin is seen as a shelling point and a safer alternative to banks during uncertainty.
The recommendation is to move funds from traditional banks to Bitcoin and explore other protective financial measures.
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Sovereign Defaults, Trust in Media, and Asset Seizure
Sovereign defaults are not rare; the US banking system has a history of similar incidents.
Trust in media declines; 85% of people cannot be trusted.
Digital "rug pull" concept plausible; awareness of risks needed.
Anticipation of bank runs leads to massive money influx to banks.
Bitcoin is perceived as a safe haven during financial uncertainty.
Bitcoin price is an unfakable global market signal of legacy system fragility.
Bitcoin potentially becomes a global reserve currency; messy, non-gradual process.
"Schelling point" concept describes uncoordinated coordination in conflict situations.
Anti-seizure bills protect the rights to buy, sell, send, and receive Bitcoin.
Executive Order 6102 (1933) exemplifies asset seizure; outlawed private gold ownership.
Physical gold defeated by the state; digital gold (Bitcoin) is undefeated, a better alternative.
God, State, and Network: Powerful Forces and Crypto-Friendly Jurisdictions
Three powerful forces in the world: God, state, and network, each offering different worldviews.
State overcame God's influence in the early 20th century; the network vs. state conflict is ongoing.
Tech companies, open source protocols, and state regulators face escalating tensions.
The state's reliance on violence contrasts with belief that math (e.g. encryption, Bitcoin) is unsolvable by force.
Crypto-friendly locations like Texas, Wyoming, Florida, Mississippi, Montana, El Salvador, and UAE provide potential safe-havens.
Holding non-confiscatable wealth (e.g., Bitcoin) is increasingly crucial.
Central bankers' and financial institutions' lack of transparency necessitates independent research and decision-making.
Balaji Srinivasan's $1 million "fire alarm" underscores the risks of USD and the benefits of hedging with BTC.
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