GM friends.
Hereâs what Iâll cover today:
đWho benefits from Robinhood L2âs success?
đ Crypto chart of the week
đď¸ The latest DeFi news
đWho benefits from Robinhood L2âs success?
The past few days have been absolutely wild for Robinhood Chain L2.
In the past 24h alone, it generated a whopping $4 million in daily revenue.
Yet as many of you know, most people use Robinhood Chain for trading memecoins. I personally think that memecoins are just a fast way to lose your money, as only 500 of the 429k total memecoin traders on Fomo made more than $1,000, according to a dashboard made by Foxy.
To me, this stat seems insane, and itâs the reason why I have no interest in trading memecoins. That said, there are several ways to capitalize on the Robinhood Chain hype even without gambling on memecoins.
Here are two strategies for that:
1. Look for the DeFi protocols that directly benefit from this trend
An example I can give you is Uniswap.
Its token UNI is up 38% this week, and I donât think thatâs a coincidence.
Because Uniswap is the main DEX for trading on Robinhood Chain and also launched a token launchpad there, its revenue has absolutely skyrocketed.
If Robinhood Chain continues to gain traction, Uniswap will also benefit, as increased memecoin trading volume will lead to higher revenue for Uniswap.
And this revenue is used for UNI buybacks.
So whenever thereâs a memecoin season, for me it makes sense to look for the revenue-generating dApps that benefit the most from it and bet on their tokens.
When Solana memecoins boomed, Pump Funâs revenue surged and PUMP pumped.
Now that we have a memecoin season on Robinhood Chain, Uniswap seems to be one of the biggest beneficiaries, and UNI is pumping.
At this moment, I think we are getting close to the late stages of the current Robinhood memecoin trend, so I donât necessarily believe that UNI still has a lot of room to surge from there, but I wanted to share this example as I think itâs useful to adopt this kind of thinking to make money off narrative trading.
2. Provide liquidity to tokenized stock pools
The 2nd way to profit off Robinhood Chainâs current hype is to be a liquidity provider.
Pons, the most popular launchpad on Robinhood Chain, came up with an interesting idea: create liquidity pools that pair a tokenized stock with a memecoin.
These pools gained a lot of traction as retail is bidding memecoins like thereâs no tomorrow, and because of that, more advanced users who are providing concentrated liquidity to pools like HOOD (tokenized stock) /USDG (stablecoin) are able to make a ton of money, as a lot of trading volume is going through these pools.
DeFi Ignas, for instance, shared how he was earning 4,000%+ APY a few days ago by providing liquidity to a HOOD/USDG pool on Robinhood Chain.
(HOOD is the tokenized stock of Robinhood)
Why? Because HOOD is also paired with memecoins in other liquidity pools, much of the memecoin trading volume flows through the HOOD/USDG pool as well when people swap USDG for a memecoin paired with HOOD.
You donât need to LP highly volatile memecoins that might go to zero; you can just LP tokenized stocks and capitalize on this mania.
Now, you may ask, whatâs the catch, or what are the downsides of doing this?
Thatâs a totally fair question, and there are a few things you should be aware of:
Impermanent loss - When you provide liquidity on a DEX, if one of the assets in that LP pair that you chose moves too much in one direction, then you will incur a high impermanent loss when exiting the position
These crazy yields will get diluted over time - As more people start providing liquidity to these pools, the yields will inevitably decrease a lot
Concentrated liquidity provision on Uniswap requires selecting the right liquidity range - If you donât select the range correctly and the assets you provide liquidity for go out of that range and donât come back, you will have to adjust the range and incur a potentially high impermanent loss
Providing liquidity to a tokenized stock/USDG pair means that you actually have to get exposure to that stock - If that stock goes down too much and you end up selling it at a low price, you will incur a loss (although itâs true that major stocks like NVDA or even HOOD are generally less volatile than altcoins)
I wanted to share these things as most people on CT seem to be focusing only on the positive aspects of LPing, but I think itâs important to also know the risks.
You can also use a tool like revert.finance to copytrade the best LPs on Robinhood Chain, but this requires doing a bit of research as well.
And my advice is to never provide liquidity directly to memecoin pools. If you want to try this strategy, do it only for tokenized stock/stablecoin type of pools.
If you wish to dive deeper, I think this tutorial from Stephen is also quite useful:
Providing concentrated liquidity is not necessarily easy, but if you learn how to do it right, it can be very profitable. Especially on Robinhood Chain, where retail traders are spending a lot of money on trading fees to buy memecoins right now.
The way I see it is this: LPing is like selling shovels during a gold rush.
To sum it up, I think itâs worth paying attention to whatâs happening on Robinhood Chain.
While I am not a fan of memecoins, I think itâs interesting how memecoins ended up being paired with stocks there, the LP opportunities that this enables, and how memecoin mania is boosting the revenue of legit projects like Uniswap.
Whenever thereâs a hot narrative, there are always a few smart ways to make money.
Chart of the week
Robinhood Chain generated 2x more revenue than Hyperliquid in the past 24h
Crypto meme of the weekđ
The latest developments in DeFi
Ethena introduced Ethena Pay - its own DeFi neobank built on Avalanche
Hyperliquid is allegedly in talks with Kraken to enter the U.S. market
Variational released Swaps - an on-chain instrument for trading RWA markets with very low execution costs
EtherFiâs proposal to activate ETHFI token buybacks just passed
Solanaâs proposal to double SOL disinflation passed
Arbitrum DAO announced that 35% of its July revenue came from Robinhood Chain
3Jane released Levered Callable Capital - a DeFi primitive making it 13x more capital efficient via capital calls
Aave increased its GHO Savings Rate to 4.50% APR
Aster extended its team token allocationâs vesting cliff by 12 months
Outcome, the first prediction market project built on top of Hyperliquid, went live
Hyperliquid Strategies expanded its equity facility from $1B to $2.5B to buy more HYPE
Wyoming adopted Chainlinkâs Proof of Reserve for its state-issued stablecoin
Injective appears to have been exploited for $4.9 million
London Stock Exchange announced plans to bring the biggest UK stocks on-chain via a collaboration with xStocks
Thatâs all for this week!
Until next time,
The DeFi Investor
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