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Dear Crypto Natives,

I took last week off from crypto mostly. Aside from a tweet or two and a reddit post after someone brought my attention to a comment made by Anthony Pompliano where he said this:

“I actually think that unfortunately the Ethereum community is going to have a rude awakening in that the DeFi space is going to be built but it’s going to be built on the Bitcoin side.”

Wow! A statement made in the face of overwhelming evidence to the contrary.

I mean…

Value locked in DeFi on Ethereum grew from $50m to $700m last year. Value locked in Lightning (Bitcoin’s only DeFi project to speak of) grew from $2 to $6m last year.

There’s now over $700m more USDT issued on Ethereum than on Bitcoin. Ethereum stole Tether from Bitcoin this year.

Ethereum has the world’s first major crypto native stablecoin in DAI. An unstoppable crypto native exchange in Uniswap. A crypto native lending protocol in Compound. All of these protocols are money legos for others to build on top of.

Ethereum has the most user friendly non-custodial wallets ever seen in crypto in the form of Argent and Gnosis safe. It has the best money protocol interfaces in the form of InstaDapp, Zerion, and DeFiSaver. It is the defacto standard for tokens (ERC20) and collectibles (ERC721).

Bitcoin is twice as old as Ethereum yet remains a ghost town for money protocols.

Why?

Nothing against Bitcoin—it’s a fantastic project and I consider it an important crypto money. But its maximalists can’t meme its way to DeFi success. Bitcoin can’t fake its way into becoming something it’s not technically capable of becoming.

The crux: Bitcoin claims to be a simple base layer on which money protocols can be built, but its base layer does not have the high expressivity to build these protocols without crazy trust assumptions. That’s why they haven’t been built after 10 years. That’s why Ethereum is necessary.

That’s why DeFi will continue to flourish on Ethereum. (Or platforms like it.)

The rude awakening for maximalists—DeFi isn’t going to be built on Bitcoin unless it makes some big changes to its core protocol to increase expressivity. Since these changes aren’t written in Bitcoin’s social contract, neither is DeFi.

I love Bitcoin. So let’s be real about its limitations.

- RSA

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Did Google and Apple declare a war on crypto last week? Blocking MetaMask, crypto YouTubers, and Coinbase Dapp Wallets over Christmas—happy holidays crypto!

MARKET MONDAY:

Scan this section and dig into anything interesting

Market numbers

ETH up a smidge to $132 from $127 last Monday

BTC down a bit to $7,302 from $7,334 last Monday

DAI stability fee steady at 4% with savings rate 4%

Market opportunities

New stuff

What’s hot

Money reads

WHAT I’M DOING

Check out a few opportunities I’m capturing right now with my crypto money

WEEKLY ASSIGNMENT:

Make time to complete this assignment before next week

Extra Credit Learning

MAIN TAKES:

Read my takes but draw your own conclusions

TWEET-A-QUESTION

Tweet me your question—I reply to one per week

Question from Twitter:

Did stablecoins kill the chance for any smart contract platforms to accrue significant monetary premium?



RSA Response:

Some recent tweets…

Actions

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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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