Linn’s Leverage will ALWAYS stay 100% free, there is no obligation to donate but if you would like to support, click the button below:
Please find “Linn’s Ledger” at the bottom of this issue. Paid Subscribers will gain access to Editions of “Linn’s Ledger” containing: Small Caps, Investment Theory, Current Research, Research Techniques, Portfolio changes, and the latest Buys/Sells.
Linn’s Leverage is a log of Linn’s research. Linn - only provides spiritual advice, never financial advice - all suffering is caused by ignorance
Linn’s Ledger will provide an update of the main portfolio when rebalancing, Linn also feature small cap / high risk plays. Understand the risks that come with these plays as I don’t want to hear any complaints if they rug or disappear. I’m in just as much risk with them as you. Do DD. Remember to hold tokens over multiple wallets for added security.
Linn is or has partnered with in the past: Maple, Redstone, Gammaswap, PREMIA, GEAR and PENDLE. Partnership or not, my views are honest and transparent.
Newsletter Sponsors:
Mantle is ETH's Largest L2 with ZK Proofs, Mantle Treasury and a token holder goverened roadmap for products and initiatives.
mETH is a Permissionless, vertically integrated protocol for ETH Liquid Staking and Liquid Restaking, Stake now at: https://app.methprotocol.xyz/restake
Gearbox isn’t just leverage anymore, it’s the backbone of a permissionless credit layer for DeFi
With $7B+ in volume, zero bad debt, 80%+ pool utilization, and integrations across LRTs, Ethena, and more, Gearbox is scaling capital efficiency like no one else
Now pushing into AI-driven UX, modular deployments, and credit account abstraction…it’s ready for 2025
Explore the future of onchain credit:
https://gearbox.fi
The only certainty in markets is volatility. Peapods empowers DeFi users to harness volatility as a source of yield – for any liquid token. We call it Volatility Farming.
With Peapods, you can earn yield, borrow against, and gain leverage on any token traded on DEXes. Through our integrated lending markets, we also offer industry-leading yet safe APYs for lenders of ETH, USDC, OHM, S and more.
GM GM, Linn is enjoying a relaxing holiday so have pre-prepared this newsletter full of Linn’s Favourite Tweets:
Degenspartan:
imo, there are 2 games at play which are not in perfect sync with each other
1st is the larger, more macro and broad fiat<>crypto game
2nd is the smaller, more micro and narrow majors<>alts game
1st game its just PvE, you play a giant marshmellow game of chicken against NPCs to see who can hold on longer and sell the top before the whole bubble pops - again
overwhelming demand against tight supply causes prices to surge at peak demand/supply, causing those blow off tops
2nd game is more PvP, since you're not playing against ez mode NPCs, but instead other players with varying experience
as with all PvP game, the meta constantly changes and there is no dominant strategy that will be perpetually successful in every situation (rock paper scissors)
i think both games are largely independent of each other
1st game win condition is to walk at peak fiat
2nd game win condition is to walk at peak BTC/ETH
you can play both games independently
imo the skills to succeed in each game is different
in game 1, it is the understanding of cycles and psychology when it comes to money
in game 2 (in defi), it is identifying who will evolve to be the apex predators in enclosed ecosystems
just sharing my mental model of how i have things currently framed - im playing 2 concurrent games, not one
i think the small picture initial goal is to win out X amount of fiat
but the big picture stretch goal is to have enough fiat, that you now want to own Y amount of coins
btw i think BTC maxis either dont realize that game 2 exists, or are just so trash at it that they believe it is an unwinnable scam
they love to cite how most alts are down against in sats
yet somehow im up more than 10x in sats since last cycle
ETH maxis are not any different
> the defi exit play is a different play from exit to fiat play
to me, "defi" is my "alts"
for others, it can be more broad to include the new eth killer stuff like dots, atom, sol, srm, or old stuff too like ltc xrp
but those are outside my niche, so i choose to focus on defi
EXPLORING A SIMPLIFIED PRICING FRAMEWORK TO MAKE SENSE OF THIS CLOWN WORLD THAT WE ALL LIVE IN
Particularly, in its first section where it revealed that many models are memes, even stuff like “revenue”.
Wait a minute.
Why are revenue or valuations memes? Aren’t those fundamentals?
Well, at what P/E multiple are things then cheap? Or expensive? In every case? Who determines the exceptions? Classified by whom?
P/E is a meme. Why? Because there is no natural law that forces down price because P/E is too high, nor are there any natural forces that pushes up price because P/E is too low.
The meme of valuations being too high or too low is a fantastic tradfi meme that many investors collectively believe in, therefore turning their beliefs regarding valuations into a self fulfilling one.
This is not to say that this meme has absolutely no logic behind it, but the outcome is determined by the belief of the meme by other participants, rather than any natural law.
What are some other tradfi memes that you can think of? There are plenty!
Here’s a good one that I’m sure you’ve heard before: Bitcoin has no cash flows, so it is worthless.
You fell for the tradfi memes? Congrats, you have been airdropped an honorary NGMI HFSP accreditation that you can suffix to your Linkedin!
Post Benjamin Graham, the art of investment can be loosely simplified to finding assets with intrinsic value below their current market price, thereby giving you a “margin of safety”. (https://www.investopedia.com/terms/i/intrinsicvalue.asp)
So, one would look at the prices of investments now, and wonder to themselves what factors are currently depressing / inflating prices, causing prices to deviate from their intrinsic values.
If they are inflated above intrinsic value - avoid.
If they are depressed below intrinsic value - explore.
I suppose, this can be expressed by,
where Value (Intrinsic) is “a measure of what an asset is worth”, usually by means of calculation of the realizable net asset value, DCF or other modeling.
where Deviation Factor (liquidity ; beta ; hype ; etc) is the distortion that may positively or negatively affect the intrinsic value, therefore, giving the current market price.
However, where this model fails is that we can clearly see that there are many assets that exist in this world that may have *zero* intrinsic value, so regardless of what positive deviation factors are applied to them, their price should still be zero.
Yet, these assets are not zero.
Why?
Scam? Ponzi? Or are they actually intrinsically worth a lot?
I postulate that the reason why tradfi is so keen and quick to write off the crypto industry is largely because their mental model does not accommodate things with no intrinsic value that can still manage to persistently have a non-zero price.
Why is Doge not zero? Why are there some NFTs that are worth an obscene amount of money?
To the tradfi NGMI HFSP bros, absolutely none of this makes sense. It is all nonsense.
After feeding information through their models, their only conclusion is that these must be scams.
Their brain inputs 0 intrinsic value, yet there is still a price.
ERROR 404.
Logic not found.
Brain implodes.
Now, that is the tradfi NGMI HFSP world.
But here, is not there.
Welcome to the clown world.
Where valueless governance tokens are actually valuable, and no one does any governance with them.
Where JPEGs have value, because we like the art. (or maybe because we hate the art)
Pollock’s works look like multi coloured bukakke and you don’t like it?
Well, screw you! Who cares about your opinion? Someone else with money disagrees with you. And the buyers set the price, not outsiders with no skin in the game.
The 69th fork of Crypto Punks that are now babified, with fast food hats, in HD, in a bored yacht club, holding a squiggle, is deployed onto Ethereum Classic Cash Vitalik’s Vision, and you think they are ugly and should be worthless?
Well, screw you! Who cares about your opinion? Someone else with money disagrees with you. And the buyers set the price, not outsiders with no skin in the game.
Owners may not even “like” it, particularly with regards to NFTs and their individual rarity or traits, collection aesthetics, their history, the current community or culture. In fact, the more absurd it is, the more it might be worth. Nothing else says “look at me, I’m not just rich, I am f*ck you rich” than owning a JPEG rock, at least for now, until something else tops that in absurdity.
The problem about all the “old world” tradfi models is that they are not able to accommodate our raw sheer autism or fathom our capability to buy “worthless” memes, sending them into multi million (or in the case of DOGE, billion) valuations.
As long as apes can ape, and apes exist, there will always be speculation.
We need a new model that can accommodate this brave, new, clown world. Something that can explain why memes have value.
Thus, I propose a simple amendment to the old mystical tradfi meme, henceforth dubbed as G's Price Proposition:
Or simplified, we add an extra component that allows us to accommodate nonsense:
where Value (Intrinsic) is “a measure of what an asset is worth”, usually by means of calculation of the realizable net asset value, DCF or other modeling, which could even be 0.
where Speculative Premium (Discount) is the positive (negative) value attributed from hype, attention or other intangibles, which could be entirely baseless, but may account for the majority or even all of the clown world’s price.
I am sure at this point, many people would like to say that their <insert unique special snowflake asset that they own> has its price NOT mainly attributed from speculative premium, but rather attributed from being intrinsically valuable.
Is it intrinsic if it cannot be measured?
Aesthetics, “community”, “good leadership with a track record”, Haskell, Looks Rare, etc
So what does one do? Make a checklist and add $100M to the market cap for each attribute?
That is absurd, innit?
However, I am not here to tell you how to value non-intrinsics, but rather to propose that there is indeed some value to speculation, which should not be ignored.
Though, I do think that in the future, traits that we currently classify as “speculative” may have models (memes) built around them, and therefore transit over and form part of an asset’s intrinsic value.
This may explain the “mainet dump” phenomenon that plagues many projects that actually DELIVER on their roadmap. The infinite future outcomes have now been pruned down to a real, tangible fixed path. Instead of the sum valuation of infinite scenarios, it now has the subset valuation of a very specific handful of scenarios.
When you can measure actual users and activity, you can only apply so much “optimism” to window dress your forecasts.
When you cannot measure anything, even the heavens is not a limit, but merely a pitstop.
So, are memes and NFTs worthless?
I am pretty sure I can sell a million DOGE for 6 figures and I’d get filled within a minute.
Coming from tradfi a long time ago, it was initially very hard for me to wrap my head around seemingly “worthless” memes.
However, I have now fully embraced the clown world that we live in.
You can’t change the wind and the world,
But you can adjust your sails, so that you can navigate this clown world.
