Premium #14 - The Tokenless Protocol With Mainstream Web2 Adoption and $70M in Funding That Nobody Talks About
Good products > Bad products with a potential token
Profiting from Polymarket, & Optimizing your Hyperlane routes
Polymarket’s prediction market platform is already one of the most successful apps of this cycle. Decentralized prediction markets for anything are a rare genuine use case for crypto in an industry starved for innovation.
Founded in 2020, Polymarket raised over $70 million from General Catalyst, Polychain, Peter Thiel’s Founders Fund, Dragonfly and Vitalik Buterin.
Daily active users are now well over 3000 and monthly volume has soared from 6m traded in December 2023 to over 100m in June 2024.
If Polymarket were to drop a token we can only guess the valuation for one of the most used applications in crypto. Will they?
This is the million dollar question. Given the investors, the valuation and the presence of a leaderboard my gut tells me yes.
Layer 2s and governance tokens have largely failed farmers. Tokens that cook now seem likely to come from apps that have a large organic user base and are not dependent on the price of bitcoin to maintain momentum. Polymarket is one of the few apps that qualify.
This is why I am checking daily for opportunities to interact and push volume.
If you need help getting set up and learning the basics I highly recommend this guide to get you started.
Let’s focus on strategies to rank up the leaderboard.
Potential Airdrop Criteria
Looking at the Polymarket leaderboard we can see they are tracking Total volume and Profit. Number of trades or active days could become a criteria, but above all we want to maximize our volume and profit made. This means we need to find winning bets. (see below)
There is a good chance that if Polymarket does an airdrop, it will be completely linear. If Polymarket cares strongly about decentralization (they do have Vitalik as an investor) it would not make sense to give the vast majority of tokens to the top whales.
This is pure speculation but I could imagine a tiered system where the top 10 or 100 whale wallets get a giant allocation, then we have various tiers for the dolphins and tunas. Guppies or plankton may or may not get anything.
For this reason I am targeting volume thresholds like 10k, 50k 100k as I would when farming a perp dex.
Profit may be a particularly important criteria as it separates real users from wash traders. Depending on your bank roll, set profit targets for your main wallet while managing risk. More on that below.
Providing liquidity to the order book by setting limit orders near the list price earns cash rewards. This may also count towards an airdrop criteria.
Personally, I find this strategy risky and it requires too much active management. You can learn how to earn limit order rewards here.
Finding the “perfect” Polymarket bet
The perfect polymarket bet is one that:
Will not tie up my capital for long
Has a clear criteria for win/loss (unlikely to go to dispute)
Pays out more than 3% on my investment
Has “decent” liquidity
Does not require me to hedge on another account
Wins
Betting “No” on “Will the US confirm aliens exist by June 2024” at 75% odds is a perfect bet.
If the answer turned out “Yes” I can probably stomach the loss given the cosmic implications and the impending collapse of the world’s financial system.
These are not always easy to find but if you do find one, go in with size and conviction.
While not quite “perfect” I have placed some sizable “No” bets on Republican Vice Presidential nominees I consider extremely unlikely and mispriced at a 6-8% “Yes” chance.
I did my research and since making the wagers the odds have reduced further. I can cash out a small profit now or hold for a few weeks for my 8% payouts. In the unlikely event I feel my “No” bets are in any sort of jeopardy I can hedge against my position.
Another quality bet from the last few weeks was a Labor victory in the UK elections “Yes” at 93-97% only a few days or weeks before paying out. Keep stacking wins like this on your primary account and avoid stepping on any land mines.
Find your area of expertise
Politics is by far the most liquid market on Polymarket. I am not particularly interested in politics but I can read the news, look at polling and statistics and find a potential misprice.
Other markets are less liquid but Polymarket caters to a range of topics from movie box office numbers to crypto airdrop dates, (a good source of NO bets) stock prices, traditional markets, pop culture and sport.
If you are going to build your portfolio of volume and profit you are likely going to have to step outside of your comfort zone at least a little bit. When operating within your comfort zone you have the best chance to make & win high conviction plays.
Sports betting caution
Betting on Sports seems appealing because there are sporting events every day allowing you to build volume quickly across 2 accounts.
You can counter trade any highly liquid event with a second account. The danger of sports betting is that if we value profit as a metric, days or weeks of smart 3-10% gains can be wiped out with only one -100% bet. Even if we hedged a +99% on another account. I want to avoid this.
You will always lose 1% of your total bet to market makers if you bet both sides of a sporting event at the same time. (This is phenomenal value compared to a bookmaker.)
The only way to avoid this is to be on the “right side” of the market by betting team A early before their odds shorten. This is difficult if you are not an experienced sports bettor.
Multi Accounting for fun and profit
Efficiently farming Polymarket will require multiple accounts. I am currently using 4
-Primary account. This is where 90% of my farming funds are. I use this wallet as a risk-on USDC earner. I find the markets I want to target and enter with some level of size, often DCAing into positions. The goal of this wallet is to never lose a bet and earn around 20% USDC per month. I can typically find at least one solid opportunity per week and I never want to tie my funds up for longer than two weeks.
-Hedging account. This account does not require much in the way of funds. Ideally I want to find positions I am confident will pay out a modest return without a hedge. The number 1 priority is styling alive. So if for any reason wagers on my Primary account start to feel threatened I will hedge against the position on this account.
This account could also be used for long shot gambles. My biggest regret so far with Polymarket was not betting YES on “Biden to be helped off the debate stage” at 3% odds.
If I were to lose a 97% bet on the primary account but win the hedged bet at 3 or 4% odds the hedged account would now be in massive profit and a more valuable wallet. At that point (or if I hit a long shot winner) I would use an exchange to transfer funds from the primary wallet to the new “winning” account.
-Sports bet A and B wallets. Given the volatile nature of sports these wallets are always going to lose a small amount of money. I am just treating this the way I would treat slippage or bridging fees which are often around 1% anyway. These wallets will not succeed in the “profit” metric as I can’t predict whether wallet A or B will win going forward. They simply provide a way to build daily volume. Once they have hit key volume thresholds I will reduce activity.
Final Tips
Pay close attention to liquidity levels. Even smaller bets can have a significant effect on price. The worst mistake I have made so far was placing a $250 bet into a market that had only $750 wagered.
Consider “sure thing” bets carefully, focusing on the time frame. If the odds and the market are favorable, but the timeframe for a payout is months away & you have a low bankroll - factor that in. Odds will change slowly and could even swing dramatically against you making a hedge harder.
On the other hand if you have high liquidity you may consider betting a “sure thing” that pays 30% 4 months from now an excellent use of your capital averaging 90% APY. There are also opportunities for smart hedging such as earning +23% (46% APY) that $POPCAT will not reach 1bn MC in 2024 while owning some $POPCAT
I generally avoid “will the sun rise tomorrow” 99.5% markets. Yes they can be helpful in increasing volume but it is likely these will either receive a low weighting towards an airdrop or simply count as +$2 while risking your entire bankroll.
Similarly avoid markets that do not have a clear winning criteria by a specific date or could end up in dispute. I was hesitant to take the generous odds on “Will Biden show signs of senility during the debate” because it seemed likely to go through dispute (it did not).
I don’t want any part of markets like this because my capital can be tied up indefinitely or end up in dispute.
VPN tracking has never been a factor for any airdrop ever but this is one case where it might pay to be overly cautious. Polymarket will be well aware most users are running multiple accounts and may take steps to not give double rewards. Whenever possible try not to always bet within a few minutes of your first wallet on the same market. This is another reason to stick to highly liquid markets.
Always double check your orders actually went through and were not just “added to the order book.”
Hyperlane - Updated Mega Route
We have covered Hyperlane in Premium newsletter #8 where we shared the “Interoperability enjoooyer on a budget” mega route. Of the 8 protocols used in that route only Layer Zero has tokenized (Debridge should be this month and you can still farm L0 S2 or Jumper). I still think it is an excellent route to hit once or twice a month to maintain exposure to all things interoperability.
Needless to say Hyperlane remains one of my main button clicking activities and is likely to achieve the highest valuation of any of the bridging protocols.
The arrival of the Renzo Hyperlane bridge now gives us an extremely cheap (as low as 1 cent) and legit reason to interact with Hyperlane multiple times per week.
Hypelane could view spamming the Renzo bridge as a “low value transaction” but this is more likely to be a problem if you do this more than once per day or all within the span of a few hours.
The Renzo bridge offers a cheap way to qualify our EVM wallets but I still put the highest priority on using the cross chain Nexus from EVM to Cosmos SDK. NOt only is NExus Hyperlane’s flagship product it could qualify 2 wallets as was the case for $W.
I am making sure all of my wallets use Nexus at least once per week and supplementing that with the merkly token bridge and Renzo.
So let's build an optimized Hyperlane route using as many tokenless protocols as possible. This is also a great way to level up your “junior wallets” onchain footprints.
Mint EzETH on ARB using
https://www.renzoprotocol.com/
Bridge EzETH to BASE using
(Note: It often takes 2 attempts to approve the transaction)
Swap EzETH to ETH using
https://app.odos.xyz/
or your favorite base dex (take a break)
Bridge ETH from base to BNB using https://minter.merkly.com/hyperlane/token ($1.76) If you are cheap bridge to Poly ($0.58)
Mint EzETh on BNB using Renzo (take a break)
Use the Renzo bridge to send EzETH from BNB to Linea
Swap EzETh to ETH using
or other tokenless DEX (take a break) You could also add a Scroll bridge here if desired.
Use any tokenless L2 bridge Jumper, Owlto, Layerswap to bridge ETH from Linea to Mode
Mint EzETh on Mode using Renzo
Bridge EzETh from Mode to ARB using the Renzo bridge (take a break)
Swap EzETh to TIA.n using Odos (custom contract address: 0xd56734d7f9979dd94fae3d67c7e928234e71cd4c)
Bridge TIA.n to Neutron and your Keplr wallet using
IBC transfer TIA.n from Neutron to Celestia then onto Osmosis
Use
to swap TIA to either MILKTIA or USDC (or both)
If you chose MILKTIA take a break. Then swap MILKTIA back to TIA and IBC transfer to Celestia then Neutron. Use Nexus to bridge TIA.n back to ARB and your EVM wallet. Swap to ETH and take a break.
If you chose USDC use
to bridge USDC from OSMO to ARB.
(Bonus) Bridge ETH or USDC from ARB to OP using
for $0.01 during the Superfest event
Following this route will use 10 different protocols airdropping dropping tokens and making 7 high quality Hyperlane interactions.
This will have you clicking buttons at various stages of the route across multiple wallets while greatly increasing your onchain footprint on each.
As always, Stay Insightful
Thanks for this, fam. Could you clarify what you personally mean when you say (take a break) between interactions for Hyperlane? 2 hours or 2 days? ;)