This episode reveals the unconventional, risk-averse strategies that propelled trader 0xLaw from a $5,000 starting stake to an eight-figure portfolio, bypassing the high-leverage gambling common in crypto.
From TikTok Skeptic to Activist Investor
- 0xLaw recounts his unusual entry into crypto, which began not with conviction but with skepticism. He discovered Wonderland Time, a fork of the Olympus DAO protocol, on TikTok and joined its Discord to mock what he saw as a Ponzi scheme. However, he quickly identified significant value disconnects between the market valuations of these protocols and their underlying treasuries.
- This led him to develop his initial strategy: RFV (Risk-Free Value) trading. This involved finding protocols where the token's market capitalization was trading below the value of its treasury assets, often stablecoins.
- He would then acquire a position and take an activist investor role, joining the community Discord to advocate for redeeming the treasury to realize its underlying value for token holders.
- Starting with just $5,000, 0xLaw systematically executed this strategy across approximately 50 different Olympus DAO forks, targeting smaller projects that larger investors ignored. This methodical approach grew his initial capital to around $120,000.
The Aerodrome Era: Mastering Bribe Efficiency
- After growing his portfolio and briefly working for a market-neutral fund, 0xLaw identified a massive opportunity on Aerodrome, a decentralized exchange on the Base blockchain that forked the Solidly model. Instead of taking simple directional bets on the AERO token, he focused on the protocol's incentive mechanics.
- He targeted the platform's bribe efficiency, a system where protocols could pay "bribes" to incentivize liquidity for their token pairs and receive more back in AERO emissions than they spent. At its peak, this created a spread where every $1 spent on bribes could return $3 in AERO tokens.
- 0xLaw’s strategy involved identifying tokens with high Protocol Owned Liquidity (POL)—liquidity owned and controlled by the protocol itself—and large treasuries they could use for bribing.
- He would acquire these tokens, engage in activist pressure to ensure they utilized the bribing system, and then leverage his positions to amplify the yield. 0xLaw explains, “On a 3x multiplier... that was the equivalent of a 15% return week over week.”
- Simultaneously, he farmed the AERO/USDC pair using a delta-neutral strategy, a method of hedging directional risk to isolate yield. He developed an edge by understanding the metrics Coinbase Ventures used for its AERO buybacks, such as short interest relative to liquidity pool size, allowing him to anticipate market movements and minimize impermanent loss.
Unconventional Trades: Sybil Attacks and White Hat Hacking
- 0xLaw details several unconventional strategies that contributed significantly to his portfolio growth, moving beyond traditional trading into exploiting system mechanics.
- The Dog Airdrop: He identified an obscure airdrop for an AI-generated NFT project where he calculated that the rewards for sybil accounts would be higher than for genuine users. A sybil attack involves creating numerous fake wallets to manipulate a system designed to reward unique users.
- He organized a team to create 13,000 wallets and mint corresponding NFTs, ultimately capturing 60% of the entire airdrop and netting a $400,000 profit in two weeks.
- White Hat Hacking: 0xLaw has also found and reported multiple exploits, including a $23 million vulnerability. He describes a process of discovering a bug, exploiting it to secure the funds, and then negotiating a bounty with the team. This highlights his deep technical due diligence process for any protocol he interacts with.
- Failed Sybil: He also shares a story of failure with the Hyperliquid airdrop, where his team's wash trading activity was detected, costing them a potential million-dollar payout. This serves as a cautionary tale on the increasing sophistication of sybil detection.
A Philosophy of Risk Aversion and Capital Preservation
- Contrary to the common narrative of crypto success stemming from high-risk, high-leverage bets, 0xLaw emphasizes a deeply risk-averse and methodical approach. He claims to have never had a month-over-month drawdown on his personal or managed funds.
- His core principle is to only take trades where he can influence or reasonably predict the outcome. This includes activist investing, exploiting protocol mechanics, or identifying near-arbitrage opportunities like the Cooler Loans trade on Fraxlend.
- 0xLaw argues that the biggest opportunity in crypto is not directional gambling but capitalizing on market inefficiencies. He states, “For a while... you could very low effort get like 50% APR like market neutral on chain and I think that that was by far the largest opportunity that crypto kind of had.”
- He believes that consistent compounding through farming and selective, high-conviction trades provides superior risk-adjusted returns over time compared to trading meme coins or perpetual futures.
The Eroding Edge and Future Opportunities
- 0xLaw acknowledges that the on-chain edge for market-neutral farming is diminishing as more capital enters the space and reduces inefficiencies. Yields that were once consistently 50-60% APR are now closer to 15%.
- Strategic Implication: For researchers and investors, this signals a shift. The "low-hanging fruit" of simple yield farming is disappearing, placing a premium on deeper research to find complex, idiosyncratic opportunities like bribe efficiency plays or activist-driven value unlocks.
- He sees future opportunities in Digital Asset Treasury (DAT) companies, which are publicly traded entities holding crypto assets. He predicts that during a bear market, these will trade at a discount to their Net Asset Value (NAV), creating RFV-style opportunities similar to the Grayscale Bitcoin Trust (GBTC) arbitrage trade.
Conclusion
This episode underscores that sustainable success in crypto can be achieved through systematic, risk-managed strategies that exploit market inefficiencies rather than pure speculation. For investors and researchers, 0xLaw's journey provides a blueprint for identifying and capitalizing on value disconnects, protocol mechanics, and arbitrage opportunities that often hide in plain sight.
