Looking back in a year or two, will this final version of the diamond hands outperform BTC? 😎
Written by: Lao Bai
It’s been two years since I wrote the diamond hands series, and today I’m presenting the third version, which is likely to be the last one. In this cycle of the crypto world, aside from rewarding BTC diamond hands, others have basically been ruthlessly extinguished. The previous diamond hands series leaned towards finding Alpha, while this issue is more about Beta. After all, some Alpha investments from before have been severely cut down, making it hard to look back on those past experiences.
The biggest Beta is, of course, the dominant BTC + ETH, SOL, BNB. As for altcoin Betas, I personally currently favor the following four and plan to continue investing in them.
1. AAVE - AAVE is one of the few assets outside the dominant BTC + ETH, SOL, BNB that you can hold long-term and sleep well at night. Its TVL has already broken previous highs, reaching over 30 billion. What’s even more commendable is that there hasn’t been a major security incident in all these years. You see traditional financial institutions like JP Morgan testing the waters in blockchain, and they prioritize AAVE for their testing.
This wave of RWA + stablecoins, the combination of blockchain and traditional finance, enhancing efficiency quickly and cost-effectively, is destined to be the primary direction for the future development of blockchain. The assets that can ride this wave, aside from public chains, have less certainty than AAVE, which is definitely going to be a leading asset in this space. The upcoming launch of V4 in the next few months is also highly anticipated, making it worth investing in.
2. Pendle - TVL has reached 6 billion, close to previous highs, and is stable as a rock, about to welcome its third wave.
The first wave of Pendle was backed by Sushiswap and some DeFi protocols, splitting yields from liquidity mining, but it didn’t generate much buzz or heat because those yields were quite illusory.
The second wave was based on Lido and Eigenlayer’s LST/LRT, which soared. After all, the yields were quite real.
The future third wave will be RWA and stablecoins, where yield stratification and risk segmentation are extremely important in traditional finance, with a massive market (over 10 trillion). As more RWA and stablecoin assets come on-chain, this sector will definitely rise with the tide. Unlike AAVE, which faces competition from Compound, Morpho, etc., Pendle is basically the only player in this space, with no competitors in sight.
The only downside is that the price is too stable, with little fluctuation. I’ll invest a bit and see how it goes over the next few months.
3. Hyperliquid - The strongest project in this cycle of token issuance, bar none.
With a user experience that crushes other on-chain perpetuals + overwhelming trading depth, it leads in trading volume and market cap.
Moreover, Hyperliquid is not just a perpetual; it is a liquidity layer on-chain. The recent integration with Phantom is the best proof, and more front-end integrations with Hyperliquid’s liquidity backend are expected in the future.
In addition to the massive buybacks happening daily, there’s also the development of the HyperEVM ecosystem, HIP-3’s RWA Perp, and various other initiatives in the pipeline.
However, Hyper is the only diamond hands investment I haven’t built a position in yet. The reason is that I sold off the airdrop from 4-10, and seeing its current market cap of nearly 50 billion makes me a bit resentful + hesitant. I hope to find a good entry point in the future; I definitely want to invest, and if not, I can always wait for the next bear market to invest…
4. Bittensor - I’ve always been skeptical of Bittensor until recently when I realized I’m starting to turn into a fan and plan to invest in it for 6-12 months.
The skepticism stemmed from its PMF; I started questioning it in 2023 and still do, as I feel Bittensor is very similar to Filecoin.
Filecoin fills its network with garbage data due to a lack of real commercial demand, while Bittensor creates its own demand without real commercial needs, leading miners to generate reasoning results that aren’t particularly useful. Last year, there were many miners colluding with validators to take advantage of emissions, leading to various dramas…
So, it always felt like this thing resembled Filecoin.
Why have I come to understand it recently?
Firstly, the development of crypto has disproven many sectors while confirming two.
The confirmed sectors are finance (DeFi, RWA, stablecoins) and gambling (meme, PolyMarket, and various forms of on-chain casinos).
Among the few that are still self-validating, Crypto + AI is definitely the largest, and even if this sector can’t be validated in the short term, it’s hard to completely disprove it.
Among all the current AI + Crypto projects, the hardest to disprove is Bittensor.
Here are a few reasons:
It has the highest market cap and is the first in mindshare in this sector; when you think of Crypto + AI, it’s the first thing that comes to mind.
Very few people can clearly explain what Bittensor is doing at this stage. Try explaining it to a friend in 10 minutes; can you make it clear?
The current subnet count is approaching 100, and next year, it should reach two to three hundred without much issue. Some subnets are genuinely showing PMF and generating revenue - (though most clients are also Web3 projects, and that revenue is negligible compared to Bittensor’s market cap)…
Bittensor is set to halve in January or February next year, similar to BTC with a hard cap of 21 million, halving approximately every four years. The upcoming halving will definitely be a significant event.
In terms of emission mechanisms and mindshare, this can be seen as the BTC of the AI x Crypto sector. The subnet design, consensus, and proof mechanisms resemble ETH - if a star subnet emerges with something genuinely PMF, it could be like Uniswap and AAVE emerging on ETH. After all, its subnet coverage ranges from decentralized training to data, computing power, reasoning, text, images, videos, drug research, and so on; you can think of almost every AI + Crypto niche having one or more subnets working on it. Therefore, compared to other projects, Bittensor feels more like a foundational platform like ETH, especially since subnets can issue their own tokens this year.
However, Bittensor’s biggest issue is its high market cap, with daily emissions exceeding one million USD. At this stage, digesting that is quite challenging. If you think it’s expensive, it’s worth paying attention to in the first half of next year; currently, it’s an investment you can consider or not.
Alright, the diamond hands series is officially concluded. Looking back in a year or two, will this final version of diamond hands outperform BTC? So, let’s record today’s prices - BTC - 118,275, AAVE - 312.7, Pendle - 4.43, Hyper - 44, TAO - 433.
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