Ouroboros Market Update #3: Renzo Airdrop, LRT Depeg Risks + Plays, Bitcoin Halving Price Performance
We cover Renzo airdrop details, how to avoid depegs and capitalize when they happen, and how Bitcoin performs post-halving. This article was first available to OLAP holders on 24 Apr'24.
In OMU #2, we covered PURR's launch. The token is now at $65m MCap and Hyperliquid has rewarded buyers of the coin with more points. The token is still not on major price data sites (CoinGecko, CMC, DexScreener) given its unique launch venue. Meanwhile, Pendle has launched new long-dated LRT pools with expiries up until Dec'24, suggesting the points meta could continue to spur trading on platform.
#1 Renzo Airdrop: 5% Airdropped + ezETH depeg + Points valuation
Actionables: Claim tokens on 2 May'24, Trading starts on 30 Apr'24
Renzo TGE: 5% airdropped. Renzo announced its token launch. REZ will TGE on Binance Launchpool on 30 Apr'24 with a 10b token supply and 10.5% initial circulation. Out of this 10.5%, 2.5% will be on Binance launchpool, 5% airdropped to users, with the remaining accruing to the foundation and be used for liquidity provision. The initial 5% airdrop is in-line with recent large airdrops - Ethena at 5% and Etherfi at 6%. Additional airdrop details include:
Linear airdrop: Distribution is based on ezPoints in each wallet. Sybil wallets have been identified, and only those passing a minimum ezPoints threshold will qualify.
Vesting for whales: The top 5% percentile of wallets (check here) will have 50% of tokens unlocked at TGE, and 50% subject to a 6-month vest.
Allocation for Milady Maker + SchizoPosters: 2% of the initial 5% airdrop, or 0.1% of the total supply, will be allocated to Milady (4,628 unique wallets) and SchizoPosters (1,947 unique wallets).
TGE first, claims later: REZ will TGE on 30 Apr'24 at 12:00 UTC, while claims will only open on 2 May'24.
Season 2: 5% of supply over the next 3 months. Season 2 will start on 26 Apr'24. Eligible wallets from Season 1 will receive a 10% boost. 10% of the supply has been earmarked for airdrops, fully unlocking in Jul'24, suggesting 5% will be reserved for Season 2 rewards.
Valuation: $0.12 per ezPoint. Currently, Renzo's TVL is 0.87x that of Etherfi's. Assuming a similar FDV / TVL ratio, Renzo should trade at approximately $3.4b FDV (Etherfi FDV: $3.9b). With about 1.37b Renzo ezPoints at the time of writing, and 500m tokens initially airdropped (5%), each ezPoint will translate into 0.36 REZ or $0.12 (0.36 REZ * $0.34/REZ).
#2 LRT Depeg Risks + Plays
Actionables: Lower leverage + Farm withdrawal-enabled LRTs + Buy depegged LRTs
ezETH Depeg + Market / CT response to airdrop announcement. Following its airdrop announcement, Renzo faced criticism for token distribution chart manipulation and for setting the airdrop claim date (2 May'24) later than the TGE date (30 Apr'24), allowing Binance Launchpool participants to trade before airdrop recipients. Additionally, ezETH depegged to 0.93 ETH on Redstone, triggering cascading liquidations on Gearbox, Morpho, Silo, and other lending protocols, likely due to withdrawals being temporarily disabled (the team said they are working towards enabling withdrawals).
Lowering leverage + Farm withdrawals enabled LRTs. We recommend lowering leverage to yield farm. While depegs of this nature are mostly temporary, liquidations are permanent. Withdrawal-enabled LRTs allow market participant to arbitrage cheap LRTs for ETH if depegs were to occur (albeit with some time delay). This in itself should prevent depegs for persisting for long periods of time. To our knowledge, only Etherfi has enabled withdrawals.
Fluid is fine. We had previously talked about Fluid as a LRT leveraged farming venue. Fluid has not onboarded ezETH because it exclusively lists Etherfi's eETH. That said, even if it had, there would have been no liquidations (assuming withdrawals were enabled), as it uses a vault balance based oracle, measuring the underlying ETH backing. This allows it to be largely immune to averse price action.
Capitalizing on depegs. We recommend closely monitoring ezETH and other LRTs’ peg prices in the event of another depeg. Although temporary depegs may occur due to LRT holders exiting via liquidity pools, given the ETH backing will likely remain intact, purchasing discounted LRTs during these situations could be profitable.
#3 Bitcoin Halving Price Performance
Actionables: Long BTC / BTC beta from halving, TP ~1.5 years later
Fourth Halving: Daily emissions lower by $30m. On 19 Apr'24, Bitcoin had its fourth halving which saw block rewards fall from 6.25 BTC to 3.125 BTC and theoretically reduces emissions / sell pressure by ~$30m a day.
BTC performs well post-halving. Empirically, BTC has performed well in the following ~1.5 years from the halving, the first / second / third halvings saw price peak out at 91x / 30x / 7.7x respectively vs. the price at the halving date. Following this, BTC has historically drifted downwards for a year and has tended to bottom out around ~2.5 years from halving.
Disclosure: The opinions expressed in this research piece are solely those of the author(s) and do not constitute financial advice. Ouroboros Capital may hold position(s) in the token(s) mentioned in this research articles. These position(s) may influence the author's perspective and analysis of the token. Readers are encouraged to conduct their own research before making any investment decisions.
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