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Das Degen: Vol.3 - Degeneracy to the Third Degree

The Story of Degenchain (ft. Upcoming Catalysts)

It's our time.

Shoutout to everyone mentioned and @yekim.eth for his newsletter.


On March 28th, just under three months after deploying the DEGEN ERC20 contract on Base, Jacek, the lead developer and founder of DEGEN, unveiled the Layer 3 Degenchain. Marketed as the blockchain equivalent of Las Vegas, but focused more on the excitement of exploration and enjoyment than gambling—Degenchain launched as one of only a handful of community token L3s.

Since then, Degenchain has attracted over 4.2 million users, 19,000 tokens, and has processed close to 60 million transactions. In the past few days alone, it’s processed more than 20 transactions per second, surpassing every other chain in TPS but Base itself (where it settles).

So how did DEGEN evolve from a small community of traders on an emerging crypto-native social platform to a "leading memecoin" on the latest L2, and further into an S-tier utility token with over 300,000 holders and a dedicated L3? 

To grasp this rapid ascent, we must delve into the history of DEGEN and its foundational platform, Farcaster ("FC").

Brief History of Farcaster

FC is a two-year-old crypto-native social network that operates as a completely permissionless and "sufficiently decentralized" protocol. Essentially, it allows users to interact in a Twitter-like environment but onchain, and with some significant distinctions: users own their handles (via wallets), and all data is stored on a decentralized and open social graph.

Unlike conventional social platforms, FC functions without a direct user interface and requires clients to interact. There are already a bunch of clients available, including SuperCast, Nook, and the in-development DEGEN-native DegenCast, but the most popular is Warpcast--which is developed and updated almost daily by the FC team.

Despite slow early traction, FC has seen a parabolic rise since introducing Frames on January 31st. Frames are applications that can be embedded directly into the FC feed, and give any “cast” the potential to be an interactive app. This innovation spurred the development of “inframe” games, new novel NFT minting and commerce experiences, and trading applications, to name a few.

Because FC accounts are connected to a user's wallet, Frames facilitate onchain interactions directly within their social feed. This eliminates the need of opening up any additional wallets and abstracts all crypto complexities away from the end user. For example, users can now mint an NFT or execute token swaps via a single click within their feed, a stark contrast to the cumbersome processes required just a year ago.

Even today, if a user wants to swap a lesser known token, they have to first find the contract address on the explorer, navigate to a DEX, connect their wallet, bridge funds if needed, paste in the token address, and then confirm the approval and swap via their web extension or phone wallet.

Now, users can click a single button directly within their social feed and execute a swap.

Let’s not forget, FC is, at its core, a social network of burgeoning communities ranging from cooking to poetry, parenting to traveling. As such, onchain discovery thrives here, especially now with Frames, as users can engage, mint, and collect content like photography directly within their feed, pretty much in an instant.

From discovering to owning in literal seconds… Welcome to FC.

Now, within this context, you can imagine a world where FC not only becomes the place for nearly all onchain discovery, but also for execution, at which point it becomes the top of the funnel for all crypto users, (i.e., the access point), and essentially the “homepage for all of crypto” (and beyond).

But how does DEGEN fit into this evolving ecosystem? Let's explore.

Brief History of DEGEN

As I’ve gone into the history of DEGEN in the past, and many others have written on the topic as well, I’ll try to keep this brief. Well, at least as brief as the “Brief History of FC” section.

DEGEN, while not the first "FC-native" token, nor the first "memecoin" airdropped to a particular FC Channel, stands as the first significant success story emanating from FC.

In fact, its impact now extends beyond being the largest "memecoin" on FC and Base, as DEGEN has rapidly evolved into one of the fastest-growing utility tokens in the entire $2.5 trillion crypto industry. But how did it get here in such a short period of time?

DEGEN was originally airdropped to about 1,600 active users in the /degen Channel on FC, a hub at that time for discussions around speculative crypto trading. The initial airdrop was notably praised for its fairness and transparency, already setting it apart from previous "FC tokens."

Initially viewed as just another "memecoin," DEGEN's trajectory shifted with the introduction of the tipping feature only a short few weeks after the token contract was deployed. This feature allowed users to tip each other DEGEN tokens directly within their FC feed. For instance, a user could comment "420 $DEGEN'' under a post they liked, and the recipient could claim this tip at the end of the month.

The tipping mechanism's significance lies in what’s given; the tips came not from the user's own holdings but directly from the DEGEN treasury. This encouraged more liberal tipping, effectively distributing DEGEN throughout the entire FC ecosystem. Further, it spurred a virtuous cycle, where those with substantial tipping allowances funded new DEGEN-native projects and even hired freelancers via tips.

This innovative feature helped expand the DEGEN holder base from 5,000 to 200,000 in just a few months, transforming DEGEN into a cornerstone of the FC ecosystem. The tipping model has since been adopted by numerous other tokens within and beyond FC, evidencing its success as a distribution and engagement tool.

The rapid growth of the DEGEN community caught the attention of developers looking to migrate to Base or integrate with FC, realizing that aligning with DEGEN could provide instant access to a large, already-funded user base, which proved to be an effective go-to-market and user-acquisition strategy, and continues to be replicated today.

DEGEN continued to build on this momentum by providing APIs for builders, which facilitated seamless integrations into new social apps, games, and protocols migrating to the platform, further enhancing the token's utility.

Today, many presume that DEGEN will become the utility token across both the FC and Base ecosystems, stating its first-mover advantage has positioned it as a likely candidate. This, in turn, would make DEGEN a top 25, or even top 10 token, contingent on the underlying growth of FC and Base.


The significance of DEGEN was underscored in early February when Jacek announced a substantial funding raise of nearly 500 ETH, followed closely by the announcement and swift deployment of the Degenchain, a dedicated L3 for DEGEN.

Notably, the DEGEN token functions as the chain's native gas token, significantly increasing the tokens utility.

Utilizing tech across the Arbitrum and Base suites, as well as a handful of tools from Syndicate and others, Degenchain was the first L3 to settle on the newer Coinbase-incubated L2 Base network and remains only one of a handful of L3s currently available across the entire crypto space.

Ultimately, the Degenchain was built on top of the Arbitrum Orbit stack as an L3, with transaction settlement delegated to the L2 Base chain.

But what exactly is an L3 and what’s the significance? To understand that, we have to go back to basics.

Ethereum: The Layer 1

Ethereum operates as a decentralized network of thousands of nodes around the globe, each running client software that maintains a public ledger and the entire blockchain history. As a Layer 1 (L1) blockchain, Ethereum also includes the core protocol (what it does) and consensus mechanism (how it does it), which transitioned from Proof of Work (PoW) to Proof of Stake (PoS) in September 2022.

Similar to other L1 networks like Bitcoin and Solana, Ethereum independently handles all block creation, transaction validation, and the execution of all smart contracts. In other words, L1s rely completely on themselves to handle and process all blockchain functions.

These quickly lead to congestion and scalability issues due to something known as the blockchain trilemma. This trilemma posits that a blockchain can achieve robust decentralization and security at the expense of scalability—or be highly scalable and secure but less decentralized.

Ethereum prioritizes decentralization and security, and as a result, inevitably faces scalability challenges, manifesting as high gas fees during peak times and slower transaction speeds. Over the past five years, these limitations have driven the development of L2 solutions, which aim to increase transaction speed, reduce costs, and enhance overall accessibility.

Base: The Layer 2

Layer 2 (L2) solutions are secondary frameworks or protocols built on top of existing L1 blockchains, designed specifically to enhance scalability by addressing the limitations inherent in L1 networks. These solutions rely on the security and finality provided by the underlying L1 but operate independently to process transactions.

Technologies like state channels and sidechains are pivotal in these efforts, facilitating faster and cheaper transactions by handling them offchain, with only periodic settlements on the L1 blockchain to ease congestion and improve throughput.

Among the most effective L2 solutions are rollups, which consolidate multiple transactions into a single one to significantly reduce the load on the main chain. This capability is crucial for applications that demand high throughput and speed. Degenchain uses AnyTrust, which is a kind of rollup.


Introduced in August of last year, Base is an Ethereum L2 chain developed using the Optimism Stack and is prominently known as the home for all “FC tokens”, including DEGEN. 

Incubated by Coinbase—one of the few remaining centralized crypto exchanges and a US-listed public company valued at $50 billion—Base benefits from the robust security of Ethereum and, to a limited extent, Coinbase's own security measures.

Base’s compatibility with Ethereum Virtual Machine (EVM) ensures that it not only retains Ethereum's security attributes but also supports a wide range of Ethereum-based applications.

Coinbase, with its $100 billion in assets and over 110 million verified global users, recently enhanced its Coinbase Wallet product, allowing quick transfers from exchange to wallet and the ability to bridge from Ethereum to Base with just a few clicks.

Arbitrum: The Layer 3

Layer 3 (L3) blockchains represent the application layer in blockchain architecture, where apps are developed to interface directly with users. Built on top of L1 or L2 infrastructures, L3 solutions are designed to improve the accessibility and user-friendliness of blockchain technology. These solutions typically integrate user interfaces, wallets, and various enhancements that simplify blockchain interactions, making it easier for everyday users to engage with and benefit from decentralized ecosystems.


Arbitrum is a leader in blockchain technology, offering products like Arbitrum Nova and Arbitrum One—L2 solutions that collectively secure over $16 billion in assets. One of Arbitrum’s innovations is the Orbit architecture, which facilitates the creation of customizable, permissionless L2 or L3 chains. Orbit provides extensive configuration options, making it an attractive choice for emerging communities seeking adaptable blockchain infrastructure.

Orbit chains operate like dedicated lanes on the Ethereum network, enabling higher transaction throughput while still benefiting from Ethereum’s robust security framework. This makes them an ideal foundation for initiatives like Degenchain, aiming to combine high performance with the security benefits of established blockchain networks.

Now that we know how Degenchain is powered, let’s take a look at its evolution.

Brief History of Degenchain (So Far)

Degenchain's introduction to the blockchain landscape was marked by immediate traction and enthusiasm. Shortly after its announcement, major FC-native projects like Lotto PGF verbally committed to developing on the chain.

Within the first 24 hours of its launch, Degenchain saw impressive activity, with more than $1 million in bridged assets, over 16,000 unique wallet interactions, and nearly 2 million transactions—remarkably, the aggregate gas fees amounted to effectively $0.00.

The momentum continued with the launch of platforms and services tailored to the chain's ecosystem. No-code NFT platforms such as @nfts2me and NFT marketplaces like were quickly announced. The chain's first memecoin, $DEPE, was also deployed.

By 48 hours post-launch, the chain boasted over $10 million in bridged assets, more than 116,000 wallets, and approximately 4 million transactions. However, not everything was seamless; the original bridge system, requiring a 7-day withdrawal period, posed a significant barrier to further adoption. Responding swiftly to this challenge, community member @pw and the team at Reservoir/Relay developed solutions for instant deposits and withdrawals.

As Degenchain's activity intensified with an influx of builders and increased transactions, the demand for a straightforward DEGEN faucet emerged. Traditionally, faucets provide builders and users with native gas tokens for initial testing, covering gas costs for bridging and early transactions. Innovatively, @markcarey developed a new DEGEN Frame that allowed users to quickly acquire enough DEGEN to fund over 70 transactions without the need for bridging.

With the bridged value and transaction volume on the rise, a race ensued among established wallets, aggregators, and decentralized exchanges (DEXs) to integrate and support Degenchain. Cielo Finance was among the first to integrate with Degenchain, enabling users to set up custom alerts and track their onchain transactions directly within Telegram and Discord using a Cielo bot.

Simultaneously, Airstack, a Degenchain partner from the outset, capitalized on a 3 million DEGEN grant, and began offering their comprehensive suite of development tools, APIs, SDKs, and no-code resources to builders on Degenchain.

Shortly after, Zerion announced their integration with Degenchain, enabling users to swap directly within the app and track/monitor their positions.

In just one week post-launch, Degenchain's momentum was undeniable, processing over 15 million transactions from more than 1 million wallets and hosting over $60 million in bridged assets—quickly ascending into the top 10 of ALL blockchains across nearly every key metric.

Amid this rapid growth, Syndicate, an API and infrastructure provider and partner of Degenchain, collaborated with Jacek to launch a "Deploy on Degen Week" grant program. This initiative set aside 10 million DEGEN—approximately half a million dollars—in prizes to further fuel development on the chain.

As the utility of DEGEN continued to expand across Base, FC, and its own L3, further integrations followed. Matcha, a decentralized exchange (DEX) aggregator, not only integrated support for Degenchain swaps but also began incentivizing these swaps with free DEGEN, adding a unique twist to the typical rewards or commonly used “points” system.

Additionally, Brrito integrated with Degenchain, allowing users to deposit ETH/USDC and passively earn DEGEN. Shortly after, Brrito expanded its offerings with a DEGEN Savings Account, enabling users to deposit ETH and earn DEGEN.

The momentum around Degenchain continued to grow as Zapper, another wallet, aggregator, and dashboard platform, announced its integration. This allowed users to track their Degenchain coins and NFTs, and access a dedicated Degenchain trending page, enhancing visibility and accessibility for users engaged with the chain.

Following Zapper's announcement, @thedapplist launched, a dashboard designed to track new projects and onchain activity, providing a valuable resource for users interested in the latest developments within the Degenchain ecosystem.

In addition, @backseats introduced DropFrame, a no-code, inframe NFT tool that simplifies the process for users to inframe their NFTs for minting with DEGEN directly on the L3.

As integrations from Zerion and Zapper were rolled out, Rainbow quickly followed suit, announcing support for Degenchain and integrated trading capabilities directly in the Rainbow app.

In the meantime, user @hlau unveiled Strata, a zero-fee, trust-minimized bridge aimed at improving cross-chain interactions. While the bridge maintained a 7-day withdrawal period, it simplified the process to a single transaction and introduced anti-rug mechanisms to enhance security.

Just a day ago, user @samo, provided a tangible comparison of transaction fees between Base and Degenchain. Analyzing a 1,000 DEGEN transaction, @samo found that the fee on Base was $0.02, whereas it was a mere $0.00000011 on Degenchain, highlighting the cost-efficiency and appeal of Degenchain.

Today, barely three weeks after launch, the chain hosts more than 4.25 million wallets who have conducted more than 33.5 million transactions, and new developments are happening daily.

So, what does this mean for the DEGEN token price? What does this mean for FC or Base? While only time will tell, one thing is certain: magic is happening everyday at the intersection of the three.

Upcoming Catalysts

Aside from new social and financial apps integrating with DEGEN, and new developments and tokens on Degenchain, there are several other near-term catalysts that could drive adoption, and subsequently, price.

Coinbase 2024 Q1 Earnings Call

Coinbase has scheduled its 2024 Q1 earnings call for Thursday, May 2, 2024, after market close.

The company currently boasts a market cap of $52 billion and has seen its stock surge nearly 230% over the last twelve months, as non-crypto-native investors flocked to it for crypto exposure.

Coinbase, despite initial challenges, including a faltering NFT Marketplace and a problematic Wallet product, has undergone substantial operational and cultural restructuring since its April 2021 Direct Listing. The company has shifted resources from its NFT Marketplace, executed layoffs, revamped its Wallet offerings, and made significant strides in integrating its services onchain—most notably with the launch of its L2 Base network.

Financially, Coinbase has shown robust growth, with revenue rising from $773 million in Q1 2023 to $954 million in Q4 2023. We believe the upcoming Q1 earnings will surpass expectations, particularly because current projections may not fully account for revenues from the Base network nor the positive impact of BTC ETF trading. Furthermore, the street may still not understand today’s Coinbase, viewing it through the lens of its past as a standalone centralized exchange (CEX) rather than as a comprehensive ecosystem.

A significant narrative shift is also evident, with Coinbase soon to be seen as an ecosystem encompassing its L2 network, improved Wallet product, and a strategic partnership with Circle, the issuer of the USDC stablecoin, among other things. Notably the USDC partnership lets Coinbase earn fees from USDC held on its platform. Recently, the Company made all USDC transfers on Base free and has stated publicly that they will remain free indefinitely.

This setup is likely to attract more users to the DeFi ecosystem on Base, where they can access higher-yield products than those available in traditional finance (TradeFi) and benefit from free onchain swaps and transfers to and from the exchange. In addition to the native USDC yield they’ll receive for holding their tokens on the Coinbase platform.

Base Growth

In their previous Q4 earnings call, Coinbase mentioned Base only once, stating that the chain held over $600 million in assets. As we approach the upcoming earnings call, and while it may still be early days for Base, there are tons of massive metrics that could be discussed.

Currently, Base is achieving a higher Transactions Per Second (TPS) rate than the other two leading L2 networks combined, a notable achievement that underscores its rapid adoption and performance.

Over the last 30 days alone, Base has processed nearly 75 million transactions. This level of activity not only demonstrates Base’s capacity and scalability but also positions it as a soon-to-be leader in the L2 space, and material contributor to Coinbase’s overall revenue and growth.

Base has experienced remarkable growth, with nearly $6 billion in assets now locked onchain. At the start of Q1 2024, that figure was approximately $750 million, representing an impressive increase of about 700% during the quarter.

Weekly Active Users on Base have shown significant growth as well, increasing from approximately 280,000 during the first weeks of January to 1.4 million today, a 400% increase Q/Q.

In the early days of January, Base was generating daily revenue of approximately $40,000 to $50,000. Today, the chain's daily revenue has increased significantly, ranging between $200,000 and $400,000. This surge has contributed to the cumulative total revenue, which now exceeds $50 million.

During 1Q24, total Base revenue grew by some $30-35 million dollars, which could represent anywhere from 2 to 5% of Coinbase quarterly revenue.

Coinbase Lists DEGEN

Coinbase has shown a willingness to engage and list popular memecoins in the past, as evidenced by its listings of $BONK, $DOGE, and $SHIB.

Given DEGEN's prominent status within the Base ecosystem as a consistent top two tokens, alongside its demonstrated utility across multiple platforms, the likelihood of Coinbase listing DEGEN seems strong.

With a robust market cap of $400 million, a broad base of more than 300,000 holders, a dedicated L3, and tons of utility across the Base and FC ecosystems, it seems more a question of timing rather than possibility. The specific timing will likely depend on continued growth in DEGEN’s user base and utility, along with Coinbase’s strategic priorities and regulatory considerations.

Farcaster Growth

The remarkable growth of FC is a potent indicator of its expanding influence in the crypto space, which directly impacts DEGEN's market dynamics and subsequently, Degenchain adoption.

In January, FC users were sending around 2,300 casts on average over a 7-day period. This activity has surged to nearly 40,000 casts in the most recent week, illustrating a significant increase in user engagement.

When looking at Daily Active Users (DAU) normalized over a 30-day period, the growth trajectory appears even more pronounced, suggesting a sustained increase in platform activity. This upward trend poses the question of whether FC can maintain its momentum and continue to gain ground in the crypto community.

Despite some variability in DAUs and other operational metrics, FC has demonstrated a strong upward trend in its protocol revenue, now surpassing $1 million in cumulative revenue. This financial milestone perhaps bolstered FC's valuation, as it was recently propelled into unicorn status—defined as a startup valued at over $1 billion. With this growing revenue and new valuation,  the FC team is well-equipped to initiate aggressive user-acquisition and marketing campaigns.

This growth is particularly noteworthy considering that FC's current user base of 350,000 connected wallets has been built entirely through word-of-mouth.

The interconnected growth dynamics between FC and DEGEN illustrate the strong linkage between platform activity and token performance. Initially, DEGEN's price surge was closely aligned with the increasing number of daily casts on FC, highlighting a positive correlation where rising platform engagement drove up the token's value. However, a notable shift occurred in April, with the correlation turning negative.

Given its current trajectory and the cyclical nature of tech adoption, there's a reasonable expectation that FC might not only sustain its growth but possibly accelerate it, further cementing its role in the crypto ecosystem and driving adoption and value to DEGEN and Degenchain.

Bitcoin & Ethereum ETFs

The landscape for crypto ETFs, particularly BTC and ETH, is evolving with significant developments.

Historically, approved Bitcoin ETFs in the U.S. did not track Bitcoin's spot price but rather utilized futures, a form of derivative. This changed on January 11th when the Securities and Exchange Commission (SEC) approved 11 spot BTC ETFs, marking a pivotal shift that enables investors to purchase Bitcoin similarly to stocks through these ETFs.

The introduction of spot BTC ETFs had an immediate and profound impact on the market. In the first week of March, these ETFs saw over $2.2 billion in net inflows, driving Bitcoin to new all-time highs. The momentum continued with a record $1 billion in net inflows on March 12th alone.

Within three months, notable funds like Fidelity's Bitcoin ETF amassed over 150,000 BTC in assets under management (approximately $10 billion), while Grayscale’s converted GBTC fund held over 520,000 BTC, and BlackRock’s ETF managed about 260,000 BTC ($18 billion). Moreover, the cumulative trading volume for U.S. spot Bitcoin ETFs exceeded $200 billion, underscoring the substantial market interest and liquidity these products have introduced.

The situation with Ethereum ETFs, however, remains uncertain. After a period of silence, the SEC began meeting with ETH ETF filers in early April. The feedback from these meetings was predominantly negative, with many expecting rejections akin to the numerous delays and rejections faced by Bitcoin ETF proposals over nearly a decade. Despite the lack of optimism, the decision deadline by the SEC for the ETH ETF is set for May 23, and the general sentiment in the crypto community remains a hopeful "when, not if," reflecting the persistent anticipation of eventual approval.

In contrast to the U.S., Hong Kong has taken a more progressive stance. On April 15th, Hong Kong regulators approved both spot ETH and BTC ETFs, which are slated to begin trading as early as May. This development could influence other regulatory bodies globally, including the SEC, to reconsider their positions and potentially accelerate the approval process for similar products in their jurisdictions.

Bitcoin Halving

Bitcoin's halving is a significant event in the crypto world, occurring every four years or every 210,000 blocks. This process reduces the rewards that miners receive for verifying transactions and securing the network by half. The most recent, which is the fourth halving, took place on April 20th, cutting the mining reward from 6.25 BTC to 3.125 BTC.

The halving serves a critical function in maintaining Bitcoin's status as a scarce and inflation-resistant asset. By halving the rate at which new Bitcoins are introduced, the event aims to mimic the scarcity and value preservation seen in precious metals like gold. This reduction in supply can lead to potential price increases, as the lower influx of new Bitcoins may lead to greater demand relative to supply.

Furthermore, the halving has become a highly anticipated event, often celebrated and closely watched by investors, analysts, and the media alike. The increased media attention not only highlights the event itself but also tends to draw new and existing investors' focus to Bitcoin's economic model and long-term value proposition.

Historically, each of the previous three halvings has been followed by significant price increases. On average, Bitcoin has seen gains of approximately 348% in the six months following past halvings. While past performance is not necessarily indicative of future results, this pattern underscores the potential market impact of reduced supply and increased demand dynamics triggered by the halving.

Onchain Summer

Last year, Coinbase launched its first "Onchain Summer" initiative, a month-long celebration in August that spotlighted the convergence of art, culture, gaming, and community within the crypto space.

This initiative marked Coinbase's first true foray into the broader crypto culture and community and featured daily new mints and integrations of various artists, musicians, and crypto applications into their platforms.

Looking ahead to this year's summer activation, while specific details have not been announced, the developments over the past year, particularly with enhancements to Coinbase's Wallet products and the new L2 network, suggest a robust lineup of partnerships and incentives could be in the pipeline.

Given Coinbase's history of promoting platform engagement through incentives such as BTC and ETH giveaways, it's reasonable to anticipate similar strategies will be employed to encourage participation in this summer's events. These incentives not only drive user engagement but also enhance visibility, potentially leading to more users on Base.

If you made it this far you are an absolute legend. I hope you learned something!

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