Fipto Research Team
February 1, 2023

The correlation between cryptos and stock indices is back and the strong rally in equity and credit markets in January has surprised most of investors. The performance is due to better than expected economic data, China reopening and low European gas prices, which have reduced recession risk. Europe has been leading the economic surprise, but the high level of the Euro area Economic Activity Surprise Index (EASI) is a source of vulnerability and might slow down euro assets in the future. In the US, lower jobless claims point to a tight labor market, but weak US domestic demand and negative earnings reports keep recession risk elevated. US equities price in a 59% probability of a recession. US momentum is falling more sharply than expected. GDP grew strongly by 2.8% in the last quarter, but the composition of growth raised concerns as investment stagnated and exports fell. Investors worried about this Fed week.


This is news that says a lot about the sector. A first rating agency is launching a rating tool for stablecoins. Moody's would be the first to get started. Until now, there was no standard in the field. The idea is excellent and will reassure institutions wishing to enter in the sector. The agency will be able to analyze the reserves guaranteeing the exchange value and the associated mechanisms that have been questioned so much in recent years. We have to go back to the various setbacks that we have experienced. Even if its legitimacy is no longer to be proven in traditional finance, the skills for this kind of profession are to be acquired. Failed stablecoins are overwhelmingly algorithmic stablecoins. It is not just a matter of auditing dollar reserves in bank accounts or treasury bills deposited as collateral to ensure the solvency of a centralized stablecoin like USDT or USDC. We obviously think of FEI, UST or HUSD There is a real mastery of on-chain analysis and the analysis of smart contracts to be acquired. This experience is necessary today to establish its legitimacy in the sector. It is therefore a brand new activity in which Moody's is embarking which is likely to make more than one crypto expert attached to decentralization smile. We will closely follow this turning point for the company. If they specialize sustainably and allocate the necessary budget it could be a game changer. However, questions remain if Moody's keeps the same business model by charging stablecoin issuers wanting to be part of the list of 20 stablecoins in the proposed grid.

Real-yield tokens

A new category of cryptos could outperform the market this year, real-yield tokens. The market is looking for fundamentals, with expensive money, it's the end of ponzinomics tokens. The market is on a quest for meaning and is looking for fundamentals built on real income that does not depend on a bull market or smokescreen traction.

Decentralized trading platforms, although not new, are riding this model. They have regained strength since the FTX scandal. Crypto traders no longer have the confidence to leave funds as collateral in centralized platforms. They are looking for new decentralized, non-custodian and transparent solutions. The recording of trades on the blockchain was until then very expensive, especially in terms of gas fees on Ethereum. But with the emergence of layers 2, the second network layers like Polygon, Arbitrum or Optimism, it’s the good momentum. The platforms are operational to trade at a much higher frequency with very fluid oracles like Chainlink. The technology is there and user traction is growing fast in the same way. Tokenomics are constructed in different ways depending on different platforms. But they are based on a common point: the real yield. Indeed, holding a token of its platforms has a real utility since it is not a simple governance token. Often with a limited supply, holding and stake a token from these platforms allows you to receive income from the fees generated by the platform. Platform fees are usually paid in stablecoin or ETH, not in a play-to-earn shit coin. These are also tokens that are quite unrelated to other categories of cryptos, they will be used more and more as a diversification tool. Their price will depend more on the volumes traded on each platform and the volatility of the markets in general. A bear market on cryptos has much less impact on the valuation of these assets, because tokens are able to generate even more income with volatility. Moreover, it is not for nothing that we find in top performer of the year 2022 largely in the green the token $GMX, leader in term of capitalization on this asset category. Real yields of these platforms can easily be around 5% in the deposited token but with high risk. The sector is still young but promising since other competitors offer this type of service with different advantages such as $DYDX $GNS $LVL $PERP or $CAP.

One of these players could well uberize the highly centralized brokerage industry of crypto and traditional assets. The challenge will obviously to reproduce financial securities performance like stocks and bonds, the technology is there but the regulation is not ready at all. The SEC is not going to like the decentralization of assets it can no longer control.

How to generate crypto income with your business ?

I am the treasurer of a company and I wish to diversify my cash investments which I do not need in the short term.

Only deposit capital you can afford to lose. Crypto-asset treasury investments are very risky

Investing :

Buy low, sell high. It is risky especially for the cash flow of a company. You must therefore invest a small part of your cash that you do not need in the short term. As on the stock market, be accompanied in this process to build a portfolio adapted to your risk profile and your investment horizon. Like in TradFi, diversification is the key. Beware of pseudo experts who will recommend this or that project to you. It's still Western movies in the sector. Conflicts of interest, price manipulation and insider trading are ubiquitous. No need to tell you about the efficiency of these markets, especially on small caps. Turn to a player that is regulated, PSAN in France or PSAV in Luxembourg for example.


Participating in proof-of-stake networks to earn rewards. This has many advantages, it is transparent both on income and on blocking periods which are known in advance. You are in the engine of the blockchain and it consumes very little energy whether you hold nodes as a baker or as a participating staker. The image of your company will not be tarnished. It is easy to make projections, but not all blockchains are created equal and diversity is likely to diminish over time. The volume tends to concentrate on the most used. Another negative point, you will receive your income with the same staked token. The income is stable with the infrastructure blockchain token, it is not with dollars or euros. Hedging is therefore necessary if you do not want to suffer from market volatility and want to extract only the value of the fruit of your labor.


Lend crypto assets for interest or borrow assets and pay interest. We discard the most controversial, that extracted from the CeFi which will disappear over time on these recent failures in our opinion. In DeFi, it is smart contracts that play the role of a bank, ensuring solvency by over-collateralizing the borrower. It is therefore not a question of worrying about the solvency of a third party but about the solidity of a smart contract. Good news it's open source, bad news the job requires skills. If the audit of the smart contract is well done, the risk is limited. And there are smart contract insurances that can cover this risk. The rates depend on the market. In a bull market, rates will tend to be higher because there will be more borrowers. Borrowers today are mainly traders. They do not borrow to finance a business but expose themselves to other crypto-assets.


Participate in the process of adding transactions to a blockchain network and earn rewards. It remains an activity in its own right. Historical income from proof of work blockchains, this income can be interesting provided you invest in the latest generation machines and set up in a region of the world where electricity is the cheapest. Forget France.

Liquidity mining:

Your company can earn rewards for providing liquidity to a decentralized platform, such as a decentralized exchange (DEX), by holding tokens a put them in a pool. Pooler, contribute their crypto assets to make it easy for others to trade within a platform. In exchange for their contributions, the participants are rewarded with a share of the platform’s fees or newly issued tokens. The rewards are paid out in the form of additional tokens, which incentivize users to participate and help increase the platform's liquidity. Be careful, however, it is not without risk since you can suffer an impermanent loss. If the price of one asset in the pool increases relative to the other asset, then the value of the liquidity provider's holding can decrease, even if the total value of the assets in the pool remains constant. Choose pairs of the same volatility with high volume and exposition you are ok with.


You can block part of the capital in a decentralized perpetual exchange pool. This brings liquidity to the pools allowing the payouts of winning traders. Traders' losses are redistributed in proportion to the commitments of the various keepers in the pool. On the other hand, the pool must pay the winnings. Statistics show that leveraged traders lose over the long term. But in the short term if there is not a lot of volume on the platform the risk is very high. Good alternative to single asset liquidity pools with better revenue in general.

Airdrops :

Participate in marketing campaigns or development of crypto projects. At first very profitable, it is very time consuming to chase protocols that can deliver airdrops. You often have to use protocols on different blockchains. Longer quests are increasingly in demand. Forget about it, it's grocery store. Stay focused on your business.

Sources : Bloomberg, Cryptoast, Coingecko, JPMorgan Research

The information presented on this page is provided to you for informational purposes only and does not constitute financial advice, an offer to sell, or a solicitation to buy, and should under no circumstances serve as a basis or be taken into counts as an incentive to engage in any investment or exposure

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February 1, 2023

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