This month, we’ve moved to a month-on-month data analysis approach.

This change helps track the performance of broad sectors and assets within those sectors.

With this vantage view, we are better positioned to spot trends and stay nimble to plug you into the next big opportunity – as soon as it surfaces.

So, what are the hottest sectors right now? Buckle up, helmets on – there are no pitstops in this race!

TLDR 📃

• Bitcoin's dominance is rising, impacting altcoins, but Base layers like DOT and SOL show resilience.
• Liquid staking protocols like Lido lead the way, driving innovation and growth in infrastructure.
• THORChain and THORSwap volumes pick up, highlighting the importance of cross-chain swaps.
• DEX revenue increases, catching up with CEX volumes—exciting updates from Velodrome, Bunni, and Onomy.
• PERP sees significant growth, while SNX and LYRA witness TVL drops. Explore Synthetix, dYdX, and Perpetual for potential opportunities.
• NEWO and Redacted Cartel allocate capital to new initiatives.

Disclaimer: Not financial nor investment advice. Any capital-related decisions you make are your full responsibility.

State of the market

Let’s start with a quick review of the state of the market; after all, our CPRO assets do not exist in isolation. You can think of the market as an auto dealership! The assets are the cars on display in this dealership -and like the premium car brand, BTC is stealing the spotlight.

Over the last month, with news of prominent TradFi players like BlackRock, Citadel, Fidelity, and others all filing for a spot, Bitcoin ETF.

Since the break above the 2-year-old resistance region you see on this chart, Bitcoin's dominance has risen 8.50% in three weeks. We're witnessing a live change in capital flows, as most are leaving altcoins and entering Bitcoin.

Such a change comes with difficulties. Bitcoin’s strength is only increasing when compared to altcoins, which can lead to fast descents or slow upswings for many of your favourite tokens.

The result? In the short term, there are many losses and lots of boredom for those with high exposure to the altcoins market.

We have our eyes on 53% as a potential level to shift the capital flow into altcoins again. In the meantime, Bitcoin will only get stronger and continue to outperform the market.

But where does that leave us? Do we pack everything, buy Bitcoin, and wait for new ATHs?

Absolutely not!

Base layers 🌃

DOT, SOL, MINA, ASTR, ARB

In crypto, base layers are like premium players– they roll with class and prestige. Base layers had a resurgence with the BTC rally last month, but they had less of a stellar performance than expected. Altcoins, including ETH, have lagged behind BTC, which presents an opportunity for accumulation.

Also, activity within the chains has been lacking, as indicated by low TVL growth.

The Polkadot ecosystem has seen TVL drop from ~$160 million to $148 million, signalling our worst performer for May/June. However, Astar has managed to scrape positive growth where other parachains have failed. This is primarily due to its work in Asia - we spoke to them on Twitter spaces earlier in June. Make sure to check it out!

Let’s look at some of the most important updates:

• Polkadot: Polkadot is like a luxury car that has seen sluggish performance but boasts high developer activities. However, Polkadot has one of the highest developer activities of any ecosystem. Other news includes the XCM V3 updates, which improve the functionality of cross-chain messaging within the Polkadot parachain ecosystem.
• Solana: Solana is rebuilding its ecosystem from scratch, revving like a futuristic artificial intelligence-powered car.  We have covered this rebuild extensively in ongoing Solana digests.
• Mina: it is still waiting for mainnet. The lack of progress mirrors Synthetix's situation over 2021/22, with minimal results. The incentivised testnet launched in May and will run before the hard fork, updating the network to the mainnet.
• Astar: Astar 2.0 is in production, with tokenomics upgrades and a host of other quality-of-life improvements set to change the face of Astar. For more info, check out their post here.
• Arbitrum: A new proposal has been posted to fund Camelot as a new ecosystem hub. This will be allocated 2 million ARB per month. The goal is to attract new multi-chain projects and drive development within the Arbitrum ecosystem.

Gains in Base Layers are tied to the performance and capital flows to the altcoin market. If BTC continues its performance, it’s highly probable that altcoins will catch up/surpass those gains at some point. Expect future updates to reflect those probabilities!

Infrastructure: where the rubber meets the road 🪜

LDO, FXS, RPL

In the crypto market, infrastructure is like the fleet of earthmovers that lay the groundwork for innovative projects. The Shanghai upgrade in March opened the doors to extreme levels of innovation and created an entirely new sector - LSD-Fi, the high-performance vehicle of the crypto world. We've been covering this explosive sector in our DeFi digests; you can find the latest here.

Leading the charge is Lido, the pioneer in liquid staking. Like a powerhouse bulldozer, Lido added a staggering 11.1% to the total ETH staked, with a whopping 788k ETH flowing in over June.

Here are the latest updates:

• Lido: The LidoDAO treasury has recently staked its entire ETH holdings. This aligns with other protocols staking their ETH within LS protocols - lead by example, as they say. We wager DAOs moving their treasuries to liquid staking will drive continued growth in the sector.
• Frax: The updates keep rolling in for Frax. More details emerge for their EVM-compatible L2, Fraxchain, where their frxETH LSD will be used for gas instead of native ETH.
• RocketPool: But wait, there's a rivalry between the top contenders in this sector. Members of the Lido team took a dig at RocketPool, claiming it lacked sufficient decentralisation and that RPL didn't grant users access to RocketPool's governance. RocketPool fired back, acknowledging the contract issues and assuring their resolution.

The rise of LSD-Fi is a key driver of performance here. We may create a new section of this report to reflect the importance of this new sector. However, keep an eye on our digests for more updates there!

Cross-chain communications: navigating interconnected roads 🛣️

RUNE, THOR, SYN, STG

In the vast landscape of the crypto market, cross-chain communications are like efficient and reliable buses that connect different ecosystems and enable seamless transfers.

Like bridges had their moment in May, cross-chain swap volume experienced an uptick, with notable gains observed in the volumes of THORChain and THORSwap.

This surge coincided with market participants' growing preference for decentralised exchanges (DEXs) amidst uncertainties surrounding centralised exchanges (CEXs) like Coinbase and Binance in recent weeks.

Here are some updates and thoughts on developments over the last month:

• THORChain/THORSwap: like a well-oiled engine, this project witnessed a significant volume increase during June compared to May. Token gains for both THOR and RUNE during periods of high volume highlight the crucial relationship between volume and token price.
• Synapse: acting as the cornerstone of bridge volume between Ethereum, its layer 2 solutions, and other ecosystems, it is a reliable transit system. However, in June, the overall bridge volume experienced a drop, leading to a decrease in Synapse's volume as well. Nevertheless, Synapse recently shared an update on its Q2 progress, providing valuable insights into the future.
• Stargate: Another prominent bridge, Stargate, experienced a flurry of activity as users scrambled to participate in a speculated LayerZero airdrop. As most of those interested have likely qualified for any airdrops, Stargate’s volume throughout June saw a massive drop of over 50%. For those interested, check out a decent guide posted here.

Just as buses navigate interconnected roads, cross-chain communications continue to play a vital role in enabling seamless transfers and expanding the horizons of the crypto landscape. While we may be in a temporary rest stop, the engines of innovation are revving, ready to power the future of cross-chain interactions.

With the altcoin market moving relatively slowly, the demand for cross-chain infrastructure has hit a lull. However, fear not; the time will come for this sector to shine bright.

Decentralised exchanges: the futuristic hyperloop of trading 🏪

VELO, LIT, NOM

In the crypto market, decentralised exchanges (DEXs) are akin to futuristic self-driving cars, revolutionising how we trade and interact with digital assets.

As market activity soared in June, DEX revenue experienced a noticeable increase compared to May. While this surge may seem minor, progress is progress, especially as DEX volumes are catching up with centralised exchanges (CEXs) in the wake of the SEC's scrutiny of platforms like Coinbase, Binance, and others.

While we eagerly await the launch of Onomy's DEX, let's take a ride and explore the latest updates from some notable players among DEXs.

• Velodrome: like a high-performance car, recently upgraded to Velodrome v2, which adds significant new functionality to Velodrome. If you're holding VELO tokens, fasten your seatbelts and follow the instructions in the provided link to upgrade to unlock an exhilarating trading experience.
• Bunni: will be launching on Arbitrum. Additionally, a sizeable new bug bounty has been launched to improve Timeless's security.
• Onomy: recently posted an update with its grand vision of an "Internet Financial System," which is like a groundbreaking concept car that pushes the boundaries of what's possible. In a recent update, Onomy unveiled its ambitious plans, shedding light on the future utility of NOM and its planned products.

Derivatives: would you dare tame the supercars of crypto? 🎰

SNX, dYdX, PERP, LYRA

Welcome to the thrilling world of crypto derivatives, where the high-performance supercars of the market reside. Strap in and get ready for a wild ride as we explore the latest developments in this sector, featuring SNX, DYDX, PERP, and LYRA.

SNX and LYRA both witnessed a drop in TVL compared to May. DyDx slightly increased. However, a contender is speeding ahead - PERP, which registered a staggering 54% increase in June, leaving others in its dust.

There are a few key developments here that shed some light on the above figures:

• Synthetix: Picture Synthetix as a sleek supercar that offers some of the cheapest perps in the market. It recently shared an update on its perp market, outlining its future targets and objectives, reaffirming its position as a dominant player in the derivatives landscape.
• dYdX: Will you take a test drive in dYdX? The long-awaited dYdX Chain testnet launched on July 5th, marking a significant milestone in their move to a new chain. Feedback from users is crucial to fine-tuning their performance, so don't hesitate to provide feedback.
• Perpetual: recently launched their Bitcoin arbitrage vaults, offering around 6% yield on BTC/USDC via a delta-neutral arbitrage strategy. *hint* TVL Growth *hint*.
• Lyra: is revving its engine too. It recently posted an update, promising exciting developments on the horizon. Make sure to stay tuned and check it out.

Web3 VCs: Cruising into the future of crypto investments 💹

NEWO, BTRFLY

Just like luxury classics hitting the open road, New World DAO and Redacted Cartel have been deploying capital into new initiatives, leading to drops in their treasuries.

Let’s find out what those initiatives are:

• New Order:  Imagine a classic car undergoing a sleek upgrade. NEWO is gearing up for a tokenomics overhaul that promises to enhance the value capture of the token significantly. But that's not all! Its Summer Bootcamp is in full swing, aiming to onboard innovative projects to the Venture SubDAO. Adding to the excitement, Wynd, a project incubated by New Order, recently announced a pre-seed raise.
• Redacted Cartel: the DAO plans to bootstrap the initialisation of its LSD (pxETH) using treasury and emissions of BTRFLY. This crucial step accelerates the development of the DINERO network, creating a robust ecosystem for all participants.

Cryptonary’s take 🧠

We've gained invaluable insights into the portfolio structures of our community through our newly added portfolio channel on Discord.

We noticed that some of you have married your bags. It’s all fine and well, having conviction in assets. But blind conviction, despite what the market is telling you regarding where the capital is flowing and where the narrative is, ends up delivering nothing other than missed opportunities and opportunity costs.

The best example of this is THORChain. It’s a great asset and solves a key problem - cross-chain swaps. However, protocol volumes are way down compared to where they were at the beginning of last year. They’re yet to recover, and other sectors are popping off with continued growth. Liquid staking protocols like LDO and RPL are the key examples there.

The crypto market, and DeFi specifically, are rapidly evolving. Our portfolios need to reflect these changes. Buying one asset and hoping it nets you generational wealth might happen. Still, you’ll likely be watching from the sidelines as other assets in the narrative limelight attract all the attention and capital.

LSD’s and LSD-Fi is where it’s at, for those wondering.

Staying focused is crucial, but not at the expense of staying nimble. We must remain dialled in and agile to truly understand what the market tells us.

Yes, we must stay focused, not just on one asset.

We have to be dialled into what the market is telling us.

As always, thank you for reading. 🙏

Cryptonary, out!