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GM. This is Milk Road. Happy Uptober to those that celebrate!

Here’s what we got for you today:

• ✍️ Revenue vs. Incentives 

• ✍️ The China boom explained

• 🥛 PRO indicators

• 🎙️ The Milk Road Show: Will Aave Become Bigger Than PayPal w/ Stani Kulecho

• 🍪 Arbitrum has surpassed 1 billion transactions since its launch

REVENUE VS INCENTIVES 🥊

1. Seeing if you can ‘pull off’ a fedora → discovering you’re the first man to ever do so. 

2. Eating that chicken nugget that fell down the gap between the kitchen counter and the oven → feeling fine. 

3. Mixing a sleeping pill with a gin and tonic on your transatlantic flight → not forcing the plane to land because “the mole-person in the front row keeps trying to sell you home and contents insurance.”

These are all high-risk, high-reward endeavors.

And the same goes for crypto companies that use incentives to drive revenue.

Cause more often than not, once the incentives dip out – so does the revenue. 

Check out what happened with SushiSwap:

SushiSwap was able to generate revenue while it had incentives…but once they dried up: sayonara revenue.

The problem? SushiSwap lacked Product Market Fit (PMF if you’re nasty).

PMF = Customers loving your product enough to stick around (incentives or no incentives).

Achieving such a fit ain’t easy – only a handful of crypto products have actually pulled it off.

But when it works, it really works. 

Check out Aave:

Back in 2021, Aave was spending more than $50M in incentives to generate less than $5M in revenue, which meant it cost them $12 for every $1 earned in revenue. 

But users liked what they saw – so once the incentives dried up, they stuck around. 

Flash forward, and now it only costs Aave $0.20 for every $1 of revenue earned (80% margins – nice!).

We can see a similar trend with Lido. In January 2021, Lido was spending $10 to generate $1 in revenue. 

Now? It’s the other way around 👇

Pink going up + green going down = sustainable revenue.

(It’s glorious, no? 🥲)

The takeaway: Incentives are a powerful tool for apps looking to bootstrap – but if they don’t have product market fit, then it’s all for nothing. 

When investing in blockchain apps, look for platforms that can (provably) sustain revenues without incentives, and your portfolio will be better for it.

…ok, but how do you go about building a successful crypto application? What does it take to not only survive, but thrive?

Idk, ask Stani Kulechov (Founder of Aave).

Don’t have his contact details? Don’t worry – we’ve got you! 

We spoke to Stani a few hours ago, in today’s episode of The Milk Road Show.

Here’s what we covered:

• Adoption rate and growth

• Revenue streams and token economics

• Aave's multichain expansion: success or setback?

Click below to get it while it’s hot! 👇

YouTube | Spotify | Apple Podcasts

THE CHINA BOOM EXPLAINED 💥

What the heck is going on here??

ICYMI: China is giving out cash faster than a drunk uncle at Christmas!

We’re going to try and cover every announcement that has been made, along with a plain English translation in five points or less…

Ok, deep breath in…aaaand GO!

1. The 14 day repo rate was lowered 10bps to 1.85%
   Translation: China made borrowing cheaper, encouraging businesses and consumers to take loans, thereby stimulating economic activity.
   

2. 234.6B Yuan ($33.3B) was injected into the Chinese banking system
   Translation: China handed out stimmy checks to its banks
   

3. The Reserve Requirement Ratio was lowered by 50bps
   Translation: China lowered the amount of cash reserves banks must keep, allowing them to lend/invest more.
   

4. Existing home mortgages were lowered by 50bps
   Translation: China lowered everyone’s monthly mortgage payments
   

5. 800B Yuan ($1.14B) worth of support was added for stocks
   Translation: The Chinese government is lending money directly to traders, so they can go and buy more stocks.

panting and wheezing

Ok, but how will this affect crypto? Turns out we covered that exact topic just yesterday with Sankalp Shangori!

Check it out 👆

MILK ROAD PRO PORTFOLIO UPDATES 📊

No, you’re not crazy.

We’ve made a switch up.

We usually run Portfolio Updates on Thursdays (“like clock-work“), and our “Where are we in the cycle?” Indicators on Tuesdays.

But we’re switching them! Which means from now on:

Tuesdays = Portfolio updates
Thursdays = Cycle Indicators

Write it down, commit it to memory, tattoo it on the back of your hand — whatever you need to do! In the meantime, we’ll keep serving up the goods. 🤝

Starting…now:

Like clock-work, every Thursday Tuesday, we’re here to share our updated list of investments from the Milk Road PRO Portfolio. 

Disclosure: We are not a day trading portfolio so don’t expect a high volume of trades. Read our “how to build a crypto portfolio in 2024” report to learn more about our portfolio strategy.

Portfolio performance 📈 

The Milk Road PRO Portfolio saw a slight increase over the past 7 days. Our portfolio value is at $92.8K, up 0.95% since last week.

Not much has changed since our last update on Thursday, but the market is showing signs of nervousness due to renewed violence in the Middle East, with crude oil reacting sharply.

Remember, oil is the "fuel" of the global economy—the cheaper it is, the better for economic growth. 🛢️ 

From a crypto perspective, Bitcoin inflows have been significant, with $1.1 billion flowing into Bitcoin ETFs over the past week—the highest since June.

Ethereum saw inflows of $160M, capturing 15% of Bitcoin's inflows—a strong sign for Ethereum despite ongoing Grayscale outflows.

We’re curious to see if this growing interest will continue and if crypto will finally start to outperform U.S. indices in the next few weeks.

Portfolio changes 👀

BITE-SIZED COOKIES FOR THE ROAD 🍪

Blockscout is the ultimate blockchain explorer, offering insights across 600+ EVM-compatible chains with detailed analytics on transactions, tokens, and contracts. It also integrates the DAppscout marketplace and other features making navigation and exploration easy. *

Arbitrum One has surpassed 1 billion transactions since its 2021 launch. This milestone reflects its growing importance in Ethereum scaling​.

Jesse Pollak, the head of Base, will now head Coinbase Wallet and join the company’s executive team. This move aims to bolster Coinbase’s position in the DeFi space.

EigenLayer's EIGEN token cracked the top 100 tokens by market capitalization during its trading debut on October 1. The token’s success underscores growing enthusiasm for EigenLayer’s innovative Ethereum-based restaking protocol.

We’re thrilled to announce that we’ll be at Permissionless III and would love to meet up with fellow attendees! Grab your tickets here, and don’t forget to use code MILK30 for 30% off.

*this is sponsored content

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DISCLAIMER: None of this is financial 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. Please be careful and do your own research.