Discussing the three major trends in the near future: OTC trading market, stablecoin innovation, and the rise of prediction platforms.

These three categories are very important and are undergoing a lot of innovation.

Translation: DeepTechFlow

I've noticed more and more traders on Twitter starting to buy altcoins. Currently, many people believe that OG DeFi tokens will return to the market (such as the current Aave).

Personally, I have a significant amount of my assets locked in many altcoins, mainly through over-the-counter (OTC) trading or angel round financing, and I also have a decent reserve of $ETH.

Today, I want to talk about a tweet I posted a few weeks ago:

These three categories are very important, but let's delve into them and see why they are interesting and why there is currently a lot of innovation in this field.

Over-the-counter trading market, stablecoins, and prediction platforms

Imagine waking up to find that your locked tokens have suddenly increased in value by 100 times, but you still have to wait a year to access them.

Imagine a world where your locked tokens are no longer idle, stablecoins are no longer boring, and you can bet on the future in a precise way…

Let's start by discussing the secondary market for over-the-counter trading.

1. Secondary Market for Over-the-Counter Trading

Do you remember the significant impact of Binance on the FTX crash? It was a crazy time. Due to the lack of over-the-counter (OTC) liquidity, Binance started selling their $FTT tokens in the market. Investors holding locked/staked/locked FTT tokens hoped to seamlessly sell their positions at significantly lower prices to anyone.

This event highlighted a significant issue in the crypto space: what do you do when you have locked tokens that are a potential goldmine (or a time bomb)?

This is where the secondary market for over-the-counter trading comes into play.

Not just for whales

First, let me explain briefly.

In the crypto space, over-the-counter trading (OTC) refers to direct trading between parties, rather than through traditional exchanges. Historically, this area was mainly for large players conducting significant trades they didn't want to make public.

But now OTC is no longer exclusive to whales. With the surge in token sales, airdrops, and lock-up schedules, there is an increasing demand for more convenient OTC solutions.

This is where the secondary market comes in.

Why is the secondary market important?

Imagine this: you are an early contributor who got involved in a promising project early on. The current fully diluted valuation (FDV) of the token is as high as $100 billion, while the valuation at your entry was only $1 billion. Congratulations, you've already seen a 100x increase on paper!

But there's a catch - you still have to lock up for 36 months.

This scenario is not just a thought experiment; it's happening throughout the crypto space. Early investors hold potential wealth but are trapped by lock-up schedules and vesting periods. The secondary market provides an exit route - or at least a way to realize some value now.

Currently, some projects are trying to address this issue: Stix, OffX, Http OTC, and Secondary Lane.

How do they work

Typically, the process is as follows:

You present your SAFT (Simple Agreement for Future Tokens) to prove that you indeed own the tokens you want to sell.
The platform showcases your offer to a closed group of potential buyers.
If there is interest, you need to obtain legal approval (because, after all, securities laws and those pesky things).
Depending on the terms of the agreement, you may also need approval from the agreement itself.

It's not as simple as listing a trade on Uniswap, but for those holding locked tokens, this could be a lifeline.

Tokenizing SAFT and decentralized OTC

Now, things get more interesting.

What if we start tokenizing SAFT itself, or creating other derivative instruments based on locked tokens? Imagine being able to trade shares of future token allocations. We already have staking, why not introduce locking liquidity further?

Let's add a completely decentralized OTC market to seamlessly trade these derivatives. No intermediaries, no closed groups - purely permissionless trading of locked assets. It sounds good in theory, but the regulatory challenges are… you know.

And yes, the secondary market for over-the-counter trading is not all sunshine and sports cars. They may increase liquidity and price discovery, which is good, but there are also some serious issues:

Insider trading: What happens when team members start selling tokens before bad news hits?

Market manipulation: Due to relatively low liquidity, these markets could become prime targets for pumping and dumping schemes.

Regulatory nightmare: The SEC has been casting a skeptical eye on the crypto industry. Adding another layer of complexity won't make them happier.

The future of the secondary market for over-the-counter trading

So where is all this heading? If I had to bet (which will be discussed in detail in the third part of the article), I would say we will see more innovation in this area. The demand is there, and in the crypto space, demand often breeds solutions - for better or for worse.

We might see:

More complex derivatives based on locked tokens
Integration with DeFi protocols to enhance liquidity and lending
Fully decentralized, compliant platforms serving everyone, including global institutional investors

One thing is certain: as long as more and more projects inherently come with lock-up periods and token vesting plans, there will be a demand for the secondary market.

Whether they will ultimately have a positive impact on the ecosystem remains to be seen.

But that's part of the fun, right?

So, how can locked tokens be transferred in a mutually acceptable contract? Is it possible to do so without communicating with DeFi protocols or the founding team?

If a contract (smart contract address) could be created to transfer/withdraw tokens to/from a specific address with exact tokens for exact addresses?

For example:

Bob will receive Monad tokens in 6 months (15% at TGE). Then 85% over the next 36 months. Bob's wallet address is 0x….. Currently, his tokens are valued at $5 billion (token valuation), with a total paper value of $200,000.

Karen wants to buy these tokens for $100,000 (50% discount = $2.5 billion valuation) because she has to accept the 36-month lock-up terms.

Bob enters his wallet, the protocol sends the tokens to him, and then he signs a message from Karen to automatically transfer all future tokens to Karen. 15% at TGE and the next 36 months of monthly transfers.

Not sure if this is feasible today, but a token standard could be created for this.

Risks:

Bob tells the protocol he wants to change the payment address. Therefore, it's best to stay in touch with the team.

For reference, I don't remember the valuation of Monad, this is just an example.

I'm not sure how to solve this OTC secondary issue without interacting with the team/legal, but that would be a dream. Making OTC sales simple.

2. Innovative Stablecoin Platforms

Let's talk about stablecoins. But here, we're not talking about the old generation of USDT or USDC, but the peculiar and fascinating 2.0 stablecoins. Because honestly, in the recent 20% daily volatility, a little more stability is a nice choice.

Moreover, stablecoins are the cornerstone of decentralized finance (DeFi), a safe haven in the storm, and something you might have wanted to switch to before the last crash.

However, traditional stablecoins like USDC and USDT have some issues:

They are centralized, which means there is a risk of a single point of failure
They face ongoing regulatory challenges
Their capital efficiency is not high

However, we have some projects that are trying to address these issues, and perhaps in the process, they will create some new problems.

Ethena's USDe

Let's focus on Ethena, because they are trying to do something… interesting. They call it the "synthetic dollar protocol," which sounds like something you would find in a sci-fi novel about a financial dystopia.

How USDe works (in theory):

You deposit staked ETH (e.g., stETH) as collateral.
Ethena opens corresponding short positions on derivative exchanges.
You receive USDe tokens as a reward.

The idea is to hedge ETH price fluctuations through short positions to maintain value stability. It's like playing on a seesaw, hoping you don't fall off.

Basically, you can stake your USDe for sUSDe and earn:

Staking rewards from ETH collateral
Funds and basis profits from the hedging position

Risks (because there's always risk)

Capital risk: What happens when the interest rate is negative for a long time?
Liquidation risk: Things could get messy if there is a large price difference between ETH and stETH.
Smart contract risk: Because DeFi without hacker threats is incomplete, right?

Ethena has an insurance fund to cover some of these risks, but in the crypto space, we know that "insurance" often means "the first thing to disappear when things go bad."

While Ethena is gaining attention, they are not the only team trying to reinvent stablecoins:

Usual Money

Usual's core positioning is a secure and decentralized fiat stablecoin issuer. They are building a multi-chain infrastructure to aggregate tokenized real-world assets (RWAs) from major players like BlackRock, Ondo, Mountain Protocol, and others.

The ultimate goal? To convert these RWAs into a permissionless, on-chain verifiable, and composable stablecoin called USD0. It's like they're trying to bridge the gap between the boring (but stable) world of traditional finance and the wild west of DeFi.

USD0 is touted as the world's first stablecoin aggregating various US Treasury bond tokens. Here's why it could be a big deal:

Security: The stablecoin is backed by actual US Treasury bonds.
Transparency: Real-time transparent reserves address one of the biggest criticisms of existing stablecoins.
Insolvency isolation: Unlike some stablecoins tied to commercial bank deposits (looking at you during the SVB crisis, USDC), USD0 aims to truly decouple from traditional banking risks.

They also have a "useless governance token," but it might not be so useless:

It grants ownership of actual protocol revenue, not just voting rights on unread proposals.
Staking $USUAL can earn more $USUAL, creating a virtuous cycle for long-term holders.
There's also discussion about future buybacks to enhance "real value" - a move that's always popular in the crypto community.

Perhaps most interestingly, Usual is allocating 90% of the supply to the community. This is a bold move in a space where founders and venture capitalists typically retain the majority of the shares.

Challenges and Issues

Of course, it's not all smooth sailing. Usual faces some significant challenges:

Regulatory scrutiny: Anything related to US Treasury bonds is bound to attract regulatory attention. How will Usual navigate this complex environment?
Competition: The stablecoin space is competitive. Can Usual carve out a significant market?
Adoption: What difference does it make for DeFi users to accept a stablecoin backed by Treasury bonds instead of the dollar?

Potential Impact

If these new stablecoin models are truly effective (effective meaning they become relevant and widely used, not just a speculative novelty), we might see some significant changes in DeFi:

Higher capital efficiency in lending
New types of yield generation strategies
Potential reduction in systemic risk (or just new, more exciting types of risk)

Honestly, as I look at these new stablecoin platforms, I think, "Haven't we learned our lesson?" I went through the UST crash, and it was as painful as getting a root canal from a drunk gorilla.

But another part of me - the part that has been hopeful since 2017 - is excited. Because this is what crypto is good at: complicating existing financial concepts and ultimately coming up with something innovative to some extent.

In the next issue, I will delve deeper into the opportunities for stablecoins. Stay tuned for insights into the profit opportunities and best investment strategies for Ethena, Usual, Anzen, Elixir USD, and Mountain USD.

3. Prediction Markets

Now let's talk about everyone's favorite hobby: speculative predictions. Why limit betting to just price fluctuations? We can bet on anything!

Imagine being able to bet on the exact date of the last Bitcoin halving, or the color of CZ's shoes after he's released from prison. That would be so much fun.

Welcome to the world of crypto prediction markets, where your flashes of insight might make you rich (or, in reality, make you lose a small fortune).

Prediction markets are not a new concept, but blockchain technology is bringing about significant changes. The concept is simple: create a market for any future event, let people trade based on their predictions, and then see how the wisdom of the crowd (or collective foolishness) plays out.

Non-Sports and Sports Betting

In crypto prediction markets, we have two options:

Non-sports prediction markets: You can bet on anything, from interest rate cuts to whether Vitalik will wear a suit.
Sports betting: When you want to combine gambling addiction with a love for sports.

Polymarket

Let's take a look at an example of a crypto prediction market: Polymarket.

How does it work?

Simply create a market around any yes/no question and let people trade. That's it!

Popular markets include politics, crypto events, and celebrity gossip - if you can think of it, there's definitely someone willing to bet on it.

But Polymarket is not the only one.

Emerging platforms like LimitlessExchange and HedgehogMarkets also hope to get a piece of the pie. LimitlessExchange offers markets priced in ETH, while HedgehogMarkets on Solana attracts users with a unique centralized betting system.

One of the most exciting developments in this field is permissionless markets. Imagine being able to create a prediction market on anything without needing permission from those old guys who have never lost thousands of dollars on some obscure meme coin.

This is the ultimate form of speech freedom supported by crypto.

Another revelation is the application of AI in market resolution. Imagine a prediction market where artificial intelligence can automatically resolve complex and nuanced events without human intervention.

It's like we're building a real oracle.

Sports

Let's talk about how you can put your ETH into action in sports. SX Bet, Azuro, and Overtime are bringing sports betting into the Web3 era:

Instant payments: No more waiting for days to withdraw your winnings.
Transparency: All bets are settled on-chain, along with the odds. No more shady bookmakers.
Global access: Bet anytime, anywhere.

The daily trading volume of some crypto sports betting platforms is even making some small countries envious.

But things are getting even crazier.

There are indications that some quite leveraged bets are appearing in the crypto prediction markets. Examples abound: LogX Trade is creating perpetual futures contracts for "what if" events such as Trump's election.

But let's not forget, low-key prediction markets also exist in meme coins.

The TRUMP and BODEN tokens are nothing but proxy bets on election results; holders are just speculators on who will win and how others will speculate.

It's like meta-betting, and it's very interesting to observe.

Looking ahead, I ask myself: will decentralized prediction markets become the standard tools for business and governance decisions, or will the all-powerful blockchain need to be consulted when giving birth one day?

One thing is for sure: the boundaries between gambling, investment, and prediction are becoming extremely blurred in the crypto prediction markets.

These possibilities are both exciting and frightening.

The Future of Prediction

So where is all this heading? If I had to bet (which I obviously do), I would say we are facing a future where the boundaries between prediction markets, traditional finance, and everyday decision-making are becoming very blurry - really, very blurry. What can we expect?

Creating a market and resolving it with AI: Imagine when markets are automatically generated around hot topics, and AI handles the determination of all outcomes.
Integrating this with real governance: Can we see prediction markets influencing policy decisions?
Micro-predicting everything: Betting on tomorrow's weather, tweet likes, or whether my crush will notice me.

Another innovative solution could involve using yield stablecoins, or even designing a lending protocol that allows users to borrow based on their holdings.

For example: betting $1,000 on Trump winning and using leverage. The position will not settle until November. So you bet $1,000, but only spend $200 (5x leverage -> capital efficiency). In fact, Levr bet is doing just that.

Or you could borrow against your position. This could make prediction markets more attractive.

Your $1,000 Trump bet -> borrow $500 USDC, which can be used for anything.

The potential here is staggering. We're talking about a world where collective wisdom is instantly connected, information has a price, and trades are as efficient as stocks.

It's like if Wikipedia and Wall Street had a child, and this child had a penchant for gambling.

But don't get too excited, we still have some obstacles to overcome:

Regulatory challenges: Governments are not too keen on unregulated gambling-based applications. Like magic, huh?
Oracle issues: How to ensure fair and accurate resolution of bets?
Market manipulation: High liquidity brings high responsibility - and potential serious chaos.

The Future is Unpredictable

The landscape is changing rapidly. From secondary OTC markets providing survival opportunities for locked token holders, to innovative stablecoins challenging our values, to prediction markets allowing you to bet on almost anything - the future of finance is being written (and rewritten) in real time.

Are these innovations the key to unlocking the next wave of crypto adoption? Or are they just allowing degens to lose money in more complex ways?

Honestly, it could be both.

What I do know is: the creativity and boldness in the crypto space always amaze me. Just when you think you've seen it all, someone comes along and creates an AI-driven, quantum entangled, blockchain-based solution to a problem you didn't even know existed.

So what's next? I don't know.

But I'll be here, ready to embrace the challenge, possibly making unwise bets in the prediction markets, chasing after new stablecoins promising endless wealth.

Because in the crypto world, the only thing crazier than the latest innovation is completely missing it.

Remember, anon: the future is unwritten, but with these new tools, maybe we can bet on it.

Just make sure your bets don't exceed what you can afford to lose. Of course, this is not investment advice - but in this wild west of finance, who can say what is investment advice?

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