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GM. This is Milk Road – the Sharpie that connects the dots of the crypto world!

Here’s what we got for you today:

• ✍️ How is Uniswap so damn dominant? 

• 📊 Crypto is only ~0.1% of global asset value

• 🥛 PRO portfolio updates

• 🎙️ The Milk Road Show: Will Bittensor ($TAO) Be the Winner of the Coming AI x Crypto Boom? w/ Kyle Reidhead

• 🍪 Ethena is launching a new stablecoin

HOW IS UNISWAP SO DAMN DOMINANT? 😦

Amazon is a two sided marketplace, made up of:

1. Buyers

2. Sellers

“Yeah, no sh*t” – you, probably.

What you might not know is that over 60% of the stuff sold on the platform doesn’t actually come from Amazon, but independent sellers. 📦️ 

But it wasn’t always like this…

• Between 1994 and 2000, everything on the site was sold by Amazon

• In that time they built up a customer base of roughly 20M people

• Which is how they were able to coax independent sellers to join their platform

• ‘Cause, much like a real-world shopping mall, sellers flock to where their customers are

All of this built a flywheel in which users attracted sellers, and sellers attracted more users (creating a defensible business in the process). 🧲

And Uniswap appears to be doing something similar in the DEX space:

Grow users → attract liquidity providers → repeat.

Here’s how they pulled it off:

1/ First mover advantage (‘the only show in town’ effect)

Uniswap created the world’s first Automated Market Maker (AMM) – the backbone of all modern DEXs.

(It was a huge deal!) 

And being first allowed them to gain a whole bunch of market share right out of the gates!

2/ Economies of scale (greater size = greater pricing power)

This one is a doozy:

Uniswap decided from the beginning that it wouldn’t take any revenue from the protocol, instead it would give 100% of the fees to liquidity providers (LPs). 

In doing so, they created happy customers who continued to provide liquidity and earn revenue in return.

For AMM’s, the more liquidity is locked in the system → the more efficient it becomes → the better the rates are for customers receiving/swapping tokens. 

This created a flywheel effect where – by providing the best product out there – the protocol attracted more LPs, which helped to attract more users. ⚙️

We know everyone wants them to turn on the “fee switch” - but there is a reason they haven’t! 

It’s to help grow Uniswap’s network effects. 👇

3/ Network effects (the larger a network is, the more valuable it becomes)

Traders go where the liquidity is → liquidity providers go where the trading volume is → Uniswap has the highest trading volume and the most liquidity.

Need that laid out in chart form? Say no more.

Traders go where the liquidity is 👇

Liquidity providers go where the volume is 👇

Ok, now take all of that, and add the fact that Uniswap is everywhere! 

It covers 23 chains within its market-leading UI (mobile app and sidebar extension) – and is all wrapped up in a consistent brand that’s been there since the dawn of DEXs. 

That’s a defensible business if we’ve ever seen one! 🛡

And ok, ok – before you say it! We know:

Aerodrome is absolutely whooping Uniswap in trading volume on Base – which doesn’t exactly back the ‘defensible business’ theory…

But we see your argument, and raise you this:

In the past 30 days, Aerodrome has paid $29.2M in token incentives in order to attract traders. 🤯 

(Our guess is, once the incentives dry up, so will their Base dominance).

All we have left to say is…

Bravo Uniswap, bravo. 🦄 

CRYPTO ONLY MAKES UP ~0.1% OF GLOBAL ASSET VALUE 📊

You know that feeling you get when you leave a day party?

You’ve been hanging out in the sun for a good 8 hours, and (let’s be honest) probably not drinking as much water as you should have been…

Your body is telling you it's time to eat five slices of pizza, chug two Gatorades, and collapse into a 12hr zombie-sleep…

But it’s like, 5pm – the sun hasn’t even set yet! ☀️

That’s how we feel about crypto as an asset class. It seems like decades pass in years in this space – but when you stop and zoom out…

You’ll realize we’re still so early!

Not feeling it? This chart should be able to get you there…

Crypto may be one of the most talked about asset classes, but it still only makes up ~0.1% of global asset value! 🤏

The takeaway: If you ever start to question whether you’re too late to crypto – or if the major projects’ growth periods are behind them…

Come back to this chart.

(You’ll realize that the sun is still up).

MILK ROAD PRO PORTFOLIO UPDATES 📊

Another weekly net-gain?

Like clock-work, every Thursday, 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 moderate increase over the past 7 days. Our portfolio value is at $91.7K, up 4.3% since last week.

It’s been another strong week for the markets, with no major disruptions except for China’s rate cuts. Bitcoin ETF inflows have been impressive over the past week, and now Ethereum investors are catching up, riding the same wave of optimism driving Bitcoin.

It feels like we’re just getting warmed up. Buckle up for the journey ahead! 😊

Portfolio changes 👀

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China is injecting $142 billion into its largest state-owned banks to address rising bad debts and a struggling economy. This move aims to boost lending capacity and support sectors facing financial difficulties​.

Ethena is launching a new stablecoin, $UStb, backed by BlackRock’s tokenized U.S. Treasuries fund. It offers a safer alternative to its existing $USDe stablecoin, which relies on more volatile assets​.

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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.