Source: Mira Christanto — Published: 2021-05-10T11:00:00Z
Week In Review Notable Messari Updates Kadena Kadena released Chainweb Mainnet 2.7 (Kadena's mainnet client) on Apr. 29, 2021. The Taproot signaling period has started. Sector Performance Overview The week ending May 6th was led by the smart contract sector dominating the week with a 30% return. The sector as a whole was boosted by Ethereum which smashed through its all-time high, rising to over $3,600. Web-3 came in second place closely followed by Currencies. On the low end, DeFi and decentralized exchanges ended the week in positive territory but lagged the rest of the sectors. Sector Drill Down - Risk and Performance Review Top Assets The week ending on May 6th was dictated once again by Dogecoin (DOGE). The surge in retail euphoria fueled DOGE’s returns making it the best-performing assets of the week with a total weekly return of 104%. Aside from DOGE’s insane performance, the rest of the assets in the top ten also had great weekly returns. The majority of the top ten ended the week deep in the green zone with double-digit returns. The only exceptions were Bitcoin (BTC) and Uniswap (UNI) which ended with a return of 4% and -2% for the week. Top asset volatilities remained stable over the week. The majority continues to be below the 7% mark with Dogecoin (DOGE) and Ripple (XRP) being the only two exceptions. In XRP’s case, volatility decreased from 14% to 12% week-over-week while DOGE’s continues to increase reaching a new high of 24% making it the riskiest asset in the group. The 30-day correlation between most of the top assets didn’t change much over the week. The only notable change was Uniswap (UNI) which saw a slight decrease in correlation with the rest of the assets in the group. Correlation with Bitcoin is starting to increase across the group. As of the end of the week, eight out of the top ten have a correlation with Bitcoin greater than 40%. Dogecoin (DOGE) has remained stable, hovering around the zero line while Uniswap’s correlation continues to decrease dipping below the 20% mark. DeFi Last week was a bit mixed for DeFi assets. While most decentralized exchanges had muted-to-negative returns, THORChain’s RUNE came out on top of the DeFi sector with a total weekly return of 28%. Lending protocols such as MakerDAO (MKR) and Compound (COMP) closely followed with weekly returns of 25% and 22% respectively. Decentralized exchanges including PanckaSwap (CAKE), SushiSwap (SUSHI), and Uniswap (UNI) came in last with weekly returns of 0.6%, -1.5%, and -2.3% Volatilities across DeFi assets are beginning to pick up. Overall the sector has seen a steady increase in volatility starting in mid-April. Most remain below 10% with the exception of MakerDAO (MKR) and RUNE which have rolling volatility slightly above the 10% level. Correlations between DeFi assets have not changed drastically over the week. Week-over-week, Terra (LUNA) has seen a slight increase in correlation with the rest of the group. In contrast, Uniswap (UNI) is starting to become slightly more uncorrelated with the rest of the sector. In terms of correlation with Bitcoin, all DeFi assets saw a small bounce over the week. The correlation between Uniswap (UNI) and Bitcoin (BTC) continues to decrease, reaching a level below 20%. MakerDAO (MKR) is the only other asset in the group with a correlation to Bitcoin below the 20% mark. Currencies The currency sector as a whole had a phenomenal week. As mentioned previously, the clear outperformer, and outlier, of the group was Dogecoin (DOGE) with a massive weekly return of 104%. Bitcoin’s forks, Bitcoin Cash (BCH), and Bitcoin SV (BSV) were the second and third best-performing assets in the group with returns of 51% and 47% over the week. Dash (DASH), Litcoin (LTC), Stellar (XLM), and Ripple (XRP) also had double-digit weeks with performances ranging between 28% and 38%. Bitcoin (BTC) and Monero (XMR) were the laggards of the group ending the week with returns of 4% and -0.5%. Volatility in the currency sector is starting to pick up. While most remain under 10%, Bitcoin’s forks saw a sudden spike in volatility over the week pushing them above 10%. Notably, Bitcoin Cash’s (BCH) volatility increased from 8% to 12% in one single day. Correlations across currencies remain on the high end of the correlation spectrum. The trend continues as correlations continue to climb across the group week-on-week. As of yesterday, the currency sector is the most correlated across all sectors covered in this report. Unsurprisingly, all currencies are starting to see an increase in their correlation to Bitcoin. Most are now above the 60% correlation level. Notably, Ripple (XRP) and Stellar (XLM) are at an all-time high reaching correlations to Bitcoin of 82% and 87% respectively. Smart Contract Platforms The smart contract platform sector was by far the best performing sector during the week. Overall, the group was up 30% boosted by the excitement around Ethereum’s all-time high week. EOS led the smart contract sector completely outpacing the rest with a whopping 52% weekly return. NEO and Ethereum (ETH) followed closely ending the week with returns of 29% and 27% respectively. Polkadot (DOT), Tron (TRX), Cosmos (ATOM), Binance Coin (BNB), and Cardano (ADA) also had strong weekly performance ranging from a low of 11% to a high of 20%. Interestingly, Solana (SOL) was the only smart contract platform that ended the week in negative territory despite being the top-performing asset last week. As is the case with most assets in this report, volatilities across smart contracts platforms are starting to increase. EOS saw the biggest increase over the week going from 7% to 11% in the span of two days. On the contrary, Tron (TRX) is the only asset with decreasing volatility across the assets in the sector. Correlation in the sector did not change much over the week. Solana (SOL) saw a slight increase in correlation during the week but it’s still the only token that remains negatively correlated to the rest of the assets in the group. Correlation with Bitcoin across smart contract platforms has been on the rise since the beginning of May. NEO, Tron (TRX), and Solana (SOL) are the three notable tokens seeing a rapid increase in correlation. Solana (SOL) continues to be the only asset with a negative correlation to Bitcoin making it a potential diversifier in the event of a sudden Bitcoin drop. Decentralized Exchanges The decentralized exchange sector was the worst-performing sector of the week ending with a 5% return. The group had one of the widest distributions of total returns with some DEXs having a great week while others fell flat. This week, RUNE led the group with a total return of 28%. Other DEXs with two-digit weekly returns include Bancor (BNT), 0x, and 1inch with performance ranging from 10% to 15%. Uniswap (UNI) was the underperformer of the group ending the week with a -2.3% return despite the highly anticipated launch of Uniswap V3. Unlike most other sectors, volatilities across decentralized exchanges have remained relatively stable in the past weeks. Since April, Bancor’s (BNT) volatility has been hovering around 5% making it the least risky asset in the sector. On the contrary, RUNE’s volatility has steadily increased over the past month reaching an all-time high of 10% as of May 6th. In terms of correlations, Uniswap (UNI) and PancakeSwap (CAKE) are the notable tokens of the week. Both are becoming slightly less correlated with the rest of the assets in the sector. Interestingly, the remaining assets experienced the opposite seeing a slight increase in correlation with one another. Correlation between decentralized exchanges and Bitcoin has followed a similar trend over the past months. During last week, most DEXs experienced a slight bump in their correlation to Bitcoin pushing some over the 70% level. Across the sector, Uniswap (UNI) is the only asset that is consistently seeing a decrease in correlation with Bitcoin. Web3 The Web3 sector was the second-best performing sector of the week with an overall return of 16%. Leading oracle provider, Chainlink dominated the Web3 sector ending the week with a 34% return. Performance among the remaining assets hovered around zero. On the positive side, Helium (HNT), Siacoin (SC), and The Graph (GRT) finished the week with low one-digit positive returns. Storj (STORJ) Stacks (STX), and Arweave (AR) were the underperformers of the group ending the week in negative territory. Volatility across the Web3 sector has become more stable over the past week. Livepeer (LPT), Storj (STORJ), and Stacks (STX) had volatilities above 20% in the past month but have seen notable reductions of more than 15% in the last three weeks. As of yesterday, volatilities in the sector have stabilized ranging from 6% to 11%. Correlations in the sector are not concentrated on either side of the spectrum. Over the past 30-days, Web3 has been the most uncorrelated sector compared to the rest covered in this report. One token worth highlighting is Stacks (STX) which has become significantly more correlated with Helium (HNT) and Livepeer (LPT) week-over-week. Correlation with Bitcoin remains highly dispersed in the Web3 sector. However, this past week most assets experience a significant jump pushing all correlations past 30%. Notably, Helium (HNT), Arweave (AR), and Stacks (STX) saw increases of more than 20% over the week.
Source: Roberto Talamas — Published: 2021-05-07T14:30:00Z
Week In Review Notable Messari Updates The Celo (CELO) proposal to activate cEUR has passed, and cEUR transfers are now enabled. The Prysmatic Labs team has released a hotfix with two critical fixes. They later shared an incident report summarizing the issues that temporarily prevented Prysm Beacon Nodes from proposing new blocks. Oasis Network validators accepted and executed the Cobalt upgrade, unlocking light client support, and cross-ParaTime token transfers. The Stellar Development Foundation is asking all those who run a Stellar node of any kind to upgrade to Protocol 17 as soon as possible. Sector Performance Overview The week ending April 29th was led by the decentralized exchange sector. Despite the drawdown during the weekend, DEXs rebounded strongly to end the weekend with a 29% return. The broad DeFi sector came in second place posting a weekly return of 24%. Web-3 and currency ended the week in positive territory but lagged the rest of the sectors. Sector Drill Down - Risk and Performance Review Top Assets As is the case with the majority of the charts in this report, all top assets by market capitalization experienced a sharp decline during the weekend. However, most assets quickly rebounded, ending the week in positive territory. Among the top assets Uniswap (UNI), Ethereum (ETH), and Cardano (ADA) ended the week with double-digit returns of 24%, 13%, and 10%, respectively. Bitcoin (BTC) and Ripple (XRP) had muted weekly returns while Polkadot (DOT), Litecoin (LTC), and Chainlink (LINK) finished the week with slightly negative returns. Volatility (measured as the rolling standard deviation of daily returns) across most top assets has been on the decline since the beginning of March 2021. Binance Coin (BNB) had the highest decline towards the end of March with volatility dropping approximately 10%. Starting in April, Dogecoin (DOGE) and Ripple (XRP) saw a spike in volatility reaching levels of 23% and 14% as of April 29th. DOGE is correlated to social media activity while XRP has been correlated to positive newsflow on the SEC lawsuit and rumors that they might even be re-listed on major exchanges. Correlation among the majority of the top assets remains high. The exception is Dogecoin (DOGE) which is the only asset with negative correlations to the rest of the group. This was caused by its rapid run-up in recent weeks and social media as its primary catalyst. DOGE benefited from Elon Musk’s tweet that the Saturday Night Live episode on May 8 would be called the Dogefather Correlations with Bitcoin have been widely dispersed over the past few months. Around mid-February, Uniswap (UNI), Dogecoin (DOGE), and Cardano (ADA) were negatively correlated to Bitcoin for a short period of time. UNI was the first to be negatively correlated as the price rallied on the back of strong growth in trading volumes. ADA followed in a strong price rally due to its strong community. Correlations across all assets have picked up since the beginning of March with the exception of Dogecoin (DOGE) which saw an abrupt decrease in the middle of April as a consequence of its skyrocketing performance due to another Elon Musk tweet. DeFi DeFi was the second-best performing sector of the week showing some resilience to the weekend’s market shock. As of April 29th, the sector ended the week with a total return of 24%. All DeFi assets finished the week in the green with MakerDAO (MKR) being the only exception, coming in at the bottom of the group with a muted return of -0.8%. This was due to its strong price rally of up to a peak of +130% in the month of April. MKR has had a busy month with several proposed parameter changes including completing their debt ceiling increase. Several additions to add tokens for inclusion as an approved collateral type is also under the proposal. This week’s outperformers were led by PancakeSwap (CAKE) with a total weekly return of 42% followed by Aave (AAVE) which ended the week with a 27% return. CAKE saw a migration to V2 while Aave launched its liquidity mining incentives program that ends July 15, 2021. Aave has also benefited from its Polygon (MATIC) integration, providing a Layer 2 scaling solution. Following a similar pattern as the top assets, all DeFi assets have seen a steady decline in volatility. Notably, PancakeSwap (CAKE) and Terra’s (LUNA) volatility decline the most during March moving from a range of 18-20% to a 6%-10% range. Across DeFi assets, MakerDAO (MKR) experienced an uptick in mid-April sending the token’s volatility to 9.8% making it the most volatile asset of the group on a rolling basis. As of April 29th, volatility in the top DeFi assets ranges from 5% to 10%. Over the past 30 days, the correlation structure of the top DeFi assets hasn’t shown strong tendencies towards either side of the correlation spectrum. Correlations in the group currently range from a low of -20% to a high of 84%. One exception is Terra (LUNA) which has become increasingly uncorrelated with the rest of the assets week-over-week. Correlation between DeFi assets and Bitcoin followed a similar pattern over the past months. To various degrees, all DeFi assets saw a decline in February followed by an increase all through March. Starting in April, correlations started to decline once again but recently started to pick up. As of yesterday, MakerDAO (MKR) has the lowest correlation to Bitcoin at 15% and Aave (AAVE) has the highest at 63%. Currencies Currencies had a mixed week of performance. Similar to the rest of the assets in the report, all currencies decline over the weekend with the majority recovering by the end of the week. Unlike DeFi assets, not all currencies ended the week with positive returns much less in the double-digits. Monero (XMR) came in at the top with a total return of 9.5% followed by Dogecoin (DOGE) with a weekly return of 5%. Dash (DASH) and Bitcoin SV (BSV) were the laggards of the group with weekly returns of -5%. Similar to the top asset’s volatility chart, the two notable assets with higher volatility within the currencies group are Dogecoin (DOGE) and Ripple (XRP). The rest of the assets have volatility ranging between 3% and 8%. Unsurprisingly, correlations among currencies are concentrated on the high end of the correlation spectrum. As stated above, this is not the case for Dogecoin (DOGE). Week-on-week the token has become slightly more uncorrelated with the rest of the group. Correlations between currencies and Bitcoin have seen some dispersion in the past few months. Starting April, correlations have been on the rise reaching over 40% across most assets in the group. Again, Dogecoin (DOGE) is the exception seeing a sharp decline in mid-April ending the month with a correlation to Bitcoin of 0.05%. Smart Contract Platforms Similar to the currency sector, smart contract platforms ended the week with mixed results. Solana (SOL) was the clear outperformer of the group ending the week with a strong double-digit performance of 32%. Interestingly, Solana was one of the few assets in this report that showed high resilience to the weekend’s market drop only dipping below the zero line for a few hours. Cosmos (ATOM), Ethereum (ETH), and Cardano (ADA) also ended the week with a two-digit performance of 14%, 13%, and 10% respectively. EOS and VeChain (VET) ended the week in the red with weekly returns of -8.6% and -13%. VET’s price action was on the back of a strong month in April where the price nearly doubled at its peak. Volatility levels in smart contract platforms have been on the rise starting in April. Similar to other charts in the report, there was a steady decline starting in March. However, most smart contract tokens are seeing their volatility increase during April. Most notably is Tron (TRX) which saw an increase in volatility from 6% to 12% over the current month. The rest of the assets have volatility ranging between 4.5% and 11% with Ethereum (ETH) being the least volatile asset of the group. Correlation among smart contract platforms tends to be on the positive side. One particular exception is Solana (SOL). Over the past 30 days, the token has become increasingly uncorrelated with the assets in the rest of the group. On a weekly basis, the correlation continued to decrease reaching levels as low as -45%. The story is the same when looking at the correlation between Bitcoin and Solana (SOL). While most smart contract platforms have a correlation higher than 20%, Solana’s correlation with Bitcoin went negative in mid-April reaching a low of -50% as of April 29th. Decentralized Exchanges The decentralized exchange sector was the best performing during the week. As a whole, DEXs ended the week with a total return of 29%. The top DEX based on performance was PancakeSwap (CAKE) with a total weekly return of 42%. Uniswap (UNI) came in second place with a 24% return. Kyber Network (KNC), Bancor (BNT), and Loopring (LRC) were the losing assets of the group ending the week with negative performance. Volatility in the sector has been relatively stable over the past few months. As mentioned previously, PancakeSwap (CAKE) is the only asset with a notable decrease in volatility among decentralized exchanges. As of yesterday, volatility across the group is below 10%. Correlations within the group aren’t concentrated on either side of the spectrum. One thing to note however is that Uniswap (UNI), PancakeSwap (CAKE), and Rune (RUNE) have seen some decline in their correlation over the past week relative to the other assets in the sector. In terms of correlation with Bitcoin, decentralized exchanges are moving in a similar direction. All correlations are above 30% ranging from a low of 33% to a high of 76%. Web-3 Web 3 assets had the widest dispersion across all sectors. Helium (HNT) and Arweave (AR) had a phenomenal week ending with returns of 36% and 30% respectively. Most assets ended the week with performance ranging from -3% to 7%. Stacks (STX) and Siacoin (SC) ended the week at the bottom of the group with returns of -5% and -8%. Asset volatilities have been quite jumpy among Web-3 assets. During March, Livepeer (LPT) and Storj (STORJ) saw a significant jump in their volatilities reaching levels above 25%. Similarly, Stacks (STX) experienced a similar increase from 5% to 25% volatility. As of April 29th, volatility in the group has stabilized below 11% with the exception of Stacks (STX) which is currently at its highest level since March. Week-over-week correlations among Web-3 have mostly remained stable. The two to note are Stacks (STX) and Arweave (AR) which are becoming increasingly uncorrelated with the rest of the group. Correlations with Bitcoin have been widely different across the Web-3 sector. While all have remained above zero, some assets have reached levels as high as 84% over the past three months which means the sector might not be as uncorrelated as some would like to believe. As of April 29th, correlations in the sector range from a low of 35% to a high of 73%. Since many Web3 projects possess their own blockchains or interoperable protocols it will be interesting to watch and see if they remain correlated to Bitcoin or start to break away as a sector.
Source: Roberto Talamas — Published: 2021-04-30T14:30:00Z
Week on Review This past quarter marked the beginning of the long-awaited ecosystem wars. As crypto markets continue to gain mainstream popularity, newfound retail adoption pushed Ethereum’s fees to all-time highs. The surge in demand, while good for the overall industry, rendered Ethereum unusable for most retail users prompting them to look outside for alternatives options. This exodus in conjunction with the growth of the application ecosystems on adjacent Layer-1s such as Binance Smart Chain (BSC), Solana, Cosmos, and Polkadot have become important factors affecting Ethereum’s dominance in the space. In this weekly recap report, we explore assets in these new chains and dive into the weekly performance of the most popular protocols across different Layer-1s. Notable Messari Intel Updates Cardano Node v1.26.2 was released by IOHK over the weekend. The Matic Foundation commenced the final stage of Phase 3 of Matic's mainnet rollout, shutting down Matic Foundation's validator nodes. Uniswap v3 core and periphery contracts have been deployed to all major Ethereum testnets. The Solana Foundation released Mainnet Beta v1.5.19 this week. Ecosystem Performance Review Ethereum As is the case with the majority of the charts in this report, most assets in the Ethereum ecosystem ended the week with negative returns. DeFi blue chips, the ones with longevity on their side, were more resilient during the bumpy market. MakerDAO showed the greatest resilience during the week ending with a 58% return. Compound was the second best-performing asset and the only other token that finished the week in positive territory ending with a 7% return. The remaining assets ended the week in the red with 0x and SushiSwap lagging the rest with returns of -22% and -28%, respectively. Cosmos All assets in the Cosmos ecosystem ended the week in negative territory. Although half of the assets had positive returns at the end of last week, all tokens experienced a sharp decline during the weekend setting the pace for the rest of the week. Among Cosmo’s assets, Mirror and Rune had the highest volatility of the group. Rune was on track to finish last week with close to a 30% return which was quickly erased during the weekend sending the token down to end the week with a -12% return. Mirror suffered the least across the board, newly listed on Binance and Huobi on April 19th. While the token had a boost following the listing performance it slowly eroded to end the week with a -4% return. At the bottom of the pack was the chain’s native token ATOM which ended the week with a -27% return. Polkadot Polkadot’s assets as a whole were the worst-performing during the week. After the widespread decline during the weekend, Polkadot’s assets continue to plummet. By the end of the week, all of them suffered two-digit declines. Sora and Polymath experience the least decline ending the week with -14% and -15% respectively. The rest of the assets ended the week in the -19% to -27% performance range. Darwinia Network was the clear laggard of the group finishing the week with a 30% decline. Binance Assets in the Binance ecosystem had a mixed week. The majority of the asset quickly rebounded following the weekend drawdown. Three of the five assets tracked in the chart below moved into the positive territory starting Tuesday, April 20th. PancakeSwap (CAKE) was the clear leader of the group ending the week with a double-digit return of 17%. Binance Coin (BNB) and Venus (XVS) also rallied following PancakeSwap’s steps but ended the week with muted performance after giving back some of their return late Wednesday, April 21st. Alpha Finance (ALPHA) was among the worst-performing assets of the group losing close to 30% by the middle of the week but quickly rebounded regaining some footing to end the week with a small loss of -2%. Cream (CREAM) had a similar trajectory as Alpha Finance losing more than 30% by mid-week but unlike ALPHA the token wasn’t able to rebound ending at the bottom of the pack with a -26% loss. Solana The Solana ecosystem had the widest dispersion of the returns during the week. Most of the assets moved in a similar fashion from April 15th to April 18th. However, Solana’s native token SOL rebounded sharply after the weekend, ending the week deep in the green with a weekly return of 29%. Hxro (HXRO) was slightly affected by the weekend market shock, never dipping into negative territory throughout the week. The remaining assets in the ecosystem were not able to rebound after the weekend drawdown ending the week with a two-digit loss. Kin and Audius were the clear underperformers of the group, with weekly returns of -26% and -28%, respectively.
Source: Roberto Talamas — Published: 2021-04-23T14:00:00Z
Subscribe for daily research briefs from the Messari team. Headlines that matter: INTEL: Kyber, Keep, Meta, Kava (+ 15 updates) Coinbase delays direct listing to April + The Paradoxes of Coinbase Nigerian Central Bank says BTC has not been banned Skybridge is the newest would-be Bitcoin ETF sponsor Paradigm invests in NFT marketplace Zora Bombshells in SEC case vs. Ripple (favorable for Ripple) SEC’s Hester Peirce: 2021 will be a turning point for crypto regulation Poor Wojak’s Almanack Stories, Scarcity, and Mimetic Desire Bitclout has made $160mm in its first week. Wut? Daily Shade: I’d have been pissed if Bitclout didn't exploit me.
Source: Ryan Selkis — Published: 2021-03-22T15:20:00Z
Accredited investor regulations have always pissed me off. The premise that only people that either own 1) over $1 million in assets, excluding their first home or 2) make an annual income over $200k are the only people qualified to invest in risky assets is ludacris. The hypocrisy of these regulations dumbfounds me daily. It’s akin to big brother SEC saying “hey, investing in this startup might cause you to lose all your money, please take your capital over to the roulette table where your odds are better”. While Vegas is designed to keep people in, investing regulations are designed to keep the 99% out. The nature of crypto networks – open, permissionless, global platforms – has largely removed barriers that restricted early-stage investing to institutional investors like hedge funds or venture funds and allowed anyone to participate. As a result, most individuals (unless you’re a U.S citizen, RIP) are able to invest in upcoming cryptonetworks and protocols without being accredited. And in the worse cases, crypto assets trade on the open market letting many individuals enter before some venture or hedge funds make their allocation. Crypto still isn’t perfect, but it’s easily 100x better than the traditional system. If you can’t beat ‘em, invest like ‘em. Still, just because you can invest, doesn’t mean you can outperform institutional investors, unless your r/DeepF**kingValue. Institutional investors often have dedicated teams and industry relationships that can give them an edge. Examining the portfolios of successful investors in the space can help anyone glean insights into what may be the next big trend. We’ve tracked down many of the top VC firms and hedge funds in crypto and recorded their liquid portfolios (assets that trade on the markets). This of course could miss equity investments or investments in networks that are not yet live. 1confirmation A16z Alameda Research Arrington XRP Capital Binance Labs Blockchain Capital BoostVC CMS Holdings Coinbase Ventures Coinfund DeFiance Capital Digital Currency Group Dragonfly Capital Electric Capital Fabric Ventures Framework Ventures Fenbushi Capital Galaxy Digital Hashkey Capital Huobi Capital/Exchange Kinetic Capital LedgerPrime Capital (Go Pro to access our full list of community screeners, including VC portfolio screeners for Multicoin, Pantera, Paradigm, Placeholder, Three Arrows Capital and more) The public nature of these portfolios and the availability of most cryptoassets ensures that both institutional and everyday investors can get in on the action (and lose together too). Some of the best networks have launched directly to their communities, whether it be Bitcoin, Yearn, or other networks. This naturally helps the enthusiast investor who is deep into a community and knows its ins and outs as opposed to a large fund looking at dozens of term sheets each day. In the traditional venture capital ecosystem, investments made in equity are illiquid for 3-10 years (Sometimes more, looking at you Stripe coming up with a Series H round). While platforms like Carta have improved the ability to trade illiquid stock, the market is still limited to accredited investors. Public tokens could level the playing field for anyone with access to a smartphone or computer. Hopefully, this results in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few.
Source: Mason Nystrom — Published: 2021-03-19T13:16:00Z
SUBSCRIBE Every bull market I feel compelled to warn fellow crypto entrepreneurs not to inadvertently turn themselves into hedge fund managers by managing a too-large crypto treasury. The time to stockpile crypto with a small percentage of your balance sheet tends to be in the depths of crypto winter and then the gradual resurgence, not after 5x market gains in three months, once the symmetry of crypto investments balances to the upside and the downside (50% dip and surge seem equally likely). Last year, we put a modest amount of BTC & ETH on our balance sheet as a "bull market hedge” after it became clear that COVID was bad, but not Spanish Flu bad. We wanted to ensure we captured market upside in the event of a bull run, so that we could ramp hiring without taking on additional dilution if the markets were going nuts. Lo and behold, subscription growth plus crypto appreciation has our balance sheet up from March 2020. That isn’t hypocrisy: our balance sheet risk was about 5-10% of our current account last year, and we took gains on the way up to fuel hiring. Today looks a LOT different than one year ago when you look at the forthiness meter. I wouldn't recommend companies keep an outsized position of crypto on their balance sheets other than a small hedge. (Don't throw it all on black in the casino when you're trying to build a business.) On the other hand now is a good time to take investment on favorable terms if your company is healthy and you’ve got a good story. We're continuing to scale Messari, with three sr. engineering hires, a head of sales, head of marketing, and a bunch of new analysts joining the fold in the past six weeks. I’m not sure we would have hired as aggressively had we not taken the bull market hedge. Something for newer companies to consider for the (inevitable) next cycle. P.S. We're still hiring...a lot. https://messari.io/careers Headlines that matter: INTEL: Terra, Keep, Fetch, Ethereum, 0x, Celo Cosmos, Compound, Polkadot (+ 20 updates) Fireblocks raises $133 million in Series C Morgan Stanley bullish, BofA bearish on Bitcoin Galaxy leads $36 million round for Republic EU doesn’t want Zuck to "become a central bank" Making money in the metaverse The Helium Flywheel (Multicoin has hit some grand slams on the seed side) Why would you own dollar debt? Daily Shade: CMS Intern upgraded to Entry Level Employee after instant classic
Source: Ryan Selkis — Published: 2021-03-18T15:45:00Z
_SUBSCRIBE There’s this really lazy critique that people make with high growth stonks, crypto assets, and other “bubbles.” They react to soaring prices with a shake of the head and a pithy “this won’t end well” and the person on the other side of the conversation nods violently in agreement. You can usually separate people who know what they are talking about from those who are just giving the safe non-contrarian “contrarian” answer by simply asking “why not?” If the answer is simply “[x] has gone up 10x in a month, and there’s no fundamental reason for it” you can usually disregard the rest of the person’s investment advice and theses on the topic in question. If the answer is more nuanced, then it’s probably worth listening to. I’ve felt this way three times in the past several years. With ICOs, I thought "this won’t end well near-term because very few of these projects have working products, BUT long-term this is a transformational way to organize capital around networks vs. firms.” With DeFi, I thought, “this won’t end well near-term because there is too much systemic over-leverage and interdependency, but long-term this is going to replace traditional financial services.” Now with NFTs, I think, “this won’t end well near-term, but long-term these primitives will be a tool used to show provenance for discrete assets from gaming goods and art, to stocks and home titles. ”Because I suck at trading, I’ve sat out the initial euphoria stage of each one of these bubbles (very sadly), but entered at something akin to the “Series A”. No 1000 baggers for me or overnight moonshots, but a couple of loooooong-term 100 baggers (legendary only by boomer standards) and more blissful sleep not flipping tokens and getting bogged down on tax esoterica. It’s (arguably?) ok to leave money on the table if it helps you maintain your sanity and keeps you operating within your risk profile. Just don’t be one of those people who doesn’t do the work, and dismisses the next exciting market with a lazy half-witted answer that every faux skeptic gives. It doesn’t make you sound smart. It makes it sound like you missed. Tomorrow: The Faustian Grayscale Bargain Headlines that matter INTEL: Loom, Rune, Cosmos, MTA, Enjin (+ 20 updates) CMS/Alameda back $5 million round for DeFi lending Protocol Alchemix (CoinDesk) Social currency platform Roll hacked for $6mm (The Block) Barstool’s Portnoy admits he "f-d up bitcoin (Decrypt) 6,000 XRP holders volunteer as third-party defendants in SEC lawsuit (CoinTelegraph) How rollups make Ethereum transactions cheaper (Decrypt) Ross Ulbricht on decentralizing social media (Ross’s Blog) NFTs and Lord Joseph Duveen and Nic Carter’s take and hard copyright questions Daily Shade: My bitcoin during bear markets, “our bitcoin” during bull markets.
Source: Ryan Selkis — Published: 2021-03-15T14:00:00Z
By Ty Young and Mason Nystrom Recently, your Twitter feed has probably been flooded by the likes of Gary V, Grimes, Jake Paul, Chamath Palihapitiya, and Mark Cuban all talking about a hot new trend called NFTs. The total value of NFT transactions quadrupled to $250 million last year, according to a study from NonFungible and L’Atelier. But what are NFTs? Why is there such speculative fever around them - spending up to millions of dollars on individual pieces of art, trading cards, and more? In this ELI5 – explain it to me like I’m five – report, we break down what NFTs are, how they work, why they are important, use cases, and actual successful applications being used today. What are NFTs? NFT stands for non-fungible tokens. It’s easiest to think of NFTs as a file format. People use file formats – like jpeg, png, or gif – to transfer information or value on the internet. NFTs are a file format that transfers data and value on blockchain networks like Ethereum. Since NFTs exist on blockchains, these tokens (or files) contain properties similar to bitcoin, primarily digital ownership (a token in a person’s wallet) and transparency (all activity is recorded on a blockchain). We’ll get into some of the other noteworthy benefits that come with NFTs further below. The term non-fungible refers to the concept of fungibility. A good is said to be fungible if it is identical and interchangeable. For example, one dollar is worth one dollar. You would happily swap dollars with me since we all agree they have the same value. Comparatively, an item is said to be non-fungible if it is unique. Lots of items are non-fungible including diamonds, houses, and baseball cards. No two of these items are the same, diamonds have different colors and cuts while houses even in cookie-cutter neighborhoods have different locations which affect how light comes into the house. An NFT is simply a token (or piece of information) that is unique. A common example of an NFT might be a digital trading card or piece of digital art. Characteristics of NFTs While NFTs are simply a way to transfer information (data), they provide various benefits because they are created on blockchain networks. While the value of an NFT can vary depending on how it’s used, generally speaking, NFTs provide the following characteristics: Unique – The hallmark trait of non-fungible tokens is that they are unique and this can be verified on a blockchain. Permanent – NFTs have permanent information and data that is stored within the token. This information can include a message, image, music, signature, or any other piece of data. Programmable – An NFT is just a piece of code on a blockchain. This means it can be programmed to have various qualities. One of the most useful qualities of NFTs to date is that royalties can be programmed (or built-in) to the tokens. This means an artist obtains a royalty on all secondary sales of their artwork. Permissionless – NFTs can be used in multiple ways if they exist on a permissionless blockchain like Ethereum(not all NFTs are on Ethereum). For example, Sorare – a sports trading card game – has third-party games (not built by the Sorare team) that use Sorare trading cards. Digital Ownership – whoever possesses an NFT in their wallet, owns and controls the NFT. Digital assets like domain names (Google.com) aren’t actually owned by Google, but instead by middlemen like GoDaddy or Verisign even though they control the rights to the asset. These qualities empower various new use cases for NFTs, some of which we outline below. How can someone make an NFT? Now that we know what NFTs are, how can we make one? Anyone can make an NFT in a few simple sets. First, you’ll start by getting your media in order to decide what you want to make an NFT. NFTs can support an array of files, like visual files (JPG, PNG, GIF, etc.), music files (MP3, etc.), 3D files (GLB, etc.), and beyond. Once your traditional file is ready, you’ll move onto the next steps. Next, you will need to set up an Ethereum Wallet. You need to create a digital wallet where you'll securely store the cryptocurrency that is used to buy, sell, and create NFTs. The wallet also allows you to safely sign in and create accounts on NFT marketplaces. After you have your Ethereum wallet, you will need to purchase a small amount of Ethereum to cover the costs of creating your first NFT. The reason being, there are fees associated with turning your content into an NFT on most major digital art marketplaces. Then, you need to connect your wallet to an NFT Marketplace. One notable and easy-to-use NFT marketplace is called Rarible. Once you’ve connected your wallet, click the “Connect” button in the top right corner of the screen. After connecting a wallet, your Rarible account is instantly generated. You now have everything you need to create, mint, and sell your first NFT. Finally, upload your file to your platform and fill out the asset’s description. At this point in the process, you’ll be able to decide whether you want to create a standalone (single pieces) or edition-based pieces (multiples NFTs of the same piece), your asset’s royalty percentage, unlockable content, and more. Once all this is prepared, you can begin the minting process, which will require some ETH to pay for approval and minting transactions. Minting an NFT is how your digital art becomes a part of the Ethereum blockchain–a public ledger that is unchangeable and tamper-proof. NFTs are tokens that get “minted” once they are created. Your digital artwork is represented as an NFT so it can then be purchased and traded in the market and digitally tracked as it changes collectors in the future. Typical Use Cases For Non-Fungible Tokens Hopefully, we’ve communicated by now the potential advantages of NFTs, and how they are simply a means to transfer value on a blockchain. Below are some of the NFTs applications that are in development or existence today. Art Digital art has taken the world by storm over the course of the past several months. Digital art combined with the digital property rights of NFTs (verifiable ownership) and perpetual royalties for artists makes NFTs a 10x improvement upon the current system. Most recently, the global auction house, Christie’s auctioned an NFT-based work of art created by Beeple, the top NFT artist by sales volume. Digital Trading Cards Sorare and NBA Top Shots are two of the most popular sports trading card collectibles. Sorare cards can be used in Sorare’s fantasy football (soccer) leagues while NBA Top Shots by Dapper Labs is developing a game that uses their NBA NFTs. Other digital trading card games include GodsUnchained which resemble strategy games like Magic the Gathering or Yu-gi-oh. Provenance Tracking and Digital Certificates of Authenticity Various items, especially collectibles and high-value items come with digital certificates. These certificates are often either stored as paper records or digital pdf copies. The benefits of digitizing these certificates and issuing them as NFTs means that any can verify the authenticity of the digital certificates and nobody can alter the information or misplace the document. ConsenSys backed company, Treum has already piloted a program with the NBA that would authenticate memorabilia such as in-game worn jerseys that are sold during an NBA game via live auctions. While there’s always the possibility of a physical object being tampered with, digital NFTs can act as a better and more automated certification than existing practices. Gaming items Gaming assets are already digital in nature, so creating them as digital assets that individuals can own presents various benefits. There are multiple game studios building games that run on blockchain rails including Blockade and Horizon. Axie Infinity, a pokemon-style game has issued creatures called “axes” as NFTs that are used in Axie Infinity’s battling feature. Lastly, there are several platforms like Enjin which are building their own platforms that facilitate game development including the issuance, or minting of gaming assets. Domain Names Blockchains inherently make for great asset registries and one of the largest digitally native assets are domain names. Domain names are digital assets that map IP addresses to more human-readable names(e.g. 18.104.22.168 to Messari.io). Ethereum Name Service, Unstoppable Domains, and Handshake are three projects taking different approaches to enable domain names on blockchains. Content Music, blogs, tweets, memes, and other digital content can all be issued as NFTs. While that doesn’t make the content valuable it does present unique opportunities for digital ownership and on-chain royalties. Although the distribution of content may remain free for blogs or music, NFTs present unique monetization opportunities for crowdfunding content or selling a blog/song similar to how one might buy vinyl records or old edition books. Decentralized publishing platform, Mirror is enabling writers to crowdfund blogs and sell them as NFTs. Other experiments include the Kings of Leon selling albums as NFTs that provide additional value including lifetime concert tickets or exclusive experiential artwork for an album. Tokenized luxury goods, e.g. wine Another interesting area NFTs could have a real-world impact could be luxury goods. Luxury goods are constantly under attack from forgers trying to replicate products. An example of this is Fine wines. One interesting project to note is OpenSea. In February of 2020, OpenSea formed a collaboration with WiV Technology, a blockchain-based unique asset technology designed for wine producers and merchants, to support ERC-721 NFTs that represent physical wine bottles. This is the first time that a physical asset has been brought to the OpenSea platform. As NFT platforms evolve, NFTs will be used to help verify unique physical asset items. Financial Products Many types of financial products aren’t interchangeable. For example, your mortgage is unique to your house, length, interest rate, and more. Any simple financial contract can be issued as an NFT and stored on a blockchain. The real estate sector, in particular, suffers from serious barriers to entry, especially for younger people. The application of blockchain technology has the potential to radically change this industry for the better by broadening access, increasing transparency, and streamlining complex transaction processes. Nori has tokenized carbon removal credits as NFT where each Nori NFT acts as a certificate representing carbon removal. Event Tickets NFTs can also play a role in combating ticket fraud if every ticket was registered on the blockchain as an NFT. With blockchain-registered tickets, they are tied to their digital counterpart. This means that you can sell them through an online exchange by simply transferring the token. The exchange makes sure that you don’t charge extra, eliminating the risk of ticket scalping. A recent example of this was when the UEFA revealed it will use a blockchain-based ticketing system to distribute Euro 2020 passes to fans’ mobile phones. The digital tickets will only produce active QR codes via Bluetooth once fans are in close proximity to the venues, in a move designed to deter ticket scalping. Tweets and Social Media Posts NFTs present an opportunity to turn media into tokenized content. For instance, selling social media posts such as Tweets are the latest use case for NFTs. You have probably seen by now, but Twitter CEO Jack Dorsey is auctioning his first-ever published tweet as an NFT. Dorsey shared a tweet with a link to a digital platform called "Valuables," that facilitates buying and selling of tweets autographed by their creators. This new use case for NFTs opens up the possibilities for selling speech or iconic cultural moments on the web. Common Misconceptions About NFTs There are various misconceptions about NFTs and so let’s discuss a few of the common critiques and misconceptions that many new entrants encounter. Can’t I just screenshot NFTs that’s a piece of artwork or an image? Why do I need the NFT? Absolutely, you can screenshot and hang up an NFT on your wall at home. You can do that with art too. But, just because you put a picture of the Mona Lisa up on your wall at home, doesn’t mean that it’s the Mona Lisa. While not up for sale, for some investors owning the Mona Lisa would be worth hundreds of millions of dollars while for others a picture on the internet would suffice. Art is also unique in that high-end art is typically a sport of the ultra wealthy who want to purchase pieces for some type of sentimental value (e.g. they like the artist) and not always because they think it will accrue value. How are NFTs valued? Simply because something is an NFT doesn’t make it valuable. Similarly, if a Twitter or Instagram influencer tells you that an NFT is a collectible, that doesn’t make it a valuable collectible. Plenty of collectibles are worthless or lose value over time. As with most goods and services the price or value is what someone is willing to pay. Over time the market decides the true value of NFTs just as it does with Bitcoin. How do NFTs with physical pieces work? When it comes to physical pieces of art, shoes, or any other goods there’s always the risk that a physical good can be altered, damaged, replaced, or destroyed. NFTs in this instance simply act as a better certificate than traditional physical or digital certificates. How do NFT royalties work? There are two types of royalties, on-chain and off-chain. On-chain royalties, such as an artist getting paid for any subsequent sale of their artwork happen automatically at the smart contract level. Off-chain royalties (e.g. someone playing a song or using it on Youtube without licensing rights) require some off-chain component, typically in the form of enforcement (e.g. Legal action). Why does digital ownership matter? As more and more value is created in digital worlds, ownership in those ecosystems becomes more important. NFTs are recorded on-chain just as cryptocurrencies are, so once ownership is transferred it cannot be reversed. As “tokens,” they possess a unique ID that distinguishes them from other NFTs. And because blockchains are typically open—that is, anyone can view the history of transactions for themselves—it’s easy to understand who owns a particular asset. In these ways, NFTs are verifiable like historic artworks: they travel securely between parties, they possess certain qualities that distinguish them from copies, and anybody who looks can make these determinations for themselves. The power of digital ownership ensures that the value individual’s create is theirs to actually control. Non-fungible Takeaways NFTs are either digitally created or tokenized real-world assets, both on a blockchain network. Physical assets that are tokenized still come with their challenges but can benefit from efficiencies that come with tokenization and smart contract automation. Digital assets created as NFTs come with property rights where ownership over a digital asset can be easily proved. Since NFTs are simply a means to transfer data and value on top of blockchains, non-fungible tokens facilitate an abundance of opportunities. These uses span everything from digital content to financial products. Just as Bitcoin spearheaded the importance of financial sovereignty, NFTs facilitate ownership of all digital assets.
Source: Mason Nystrom — Published: 2021-03-09T09:30:00Z
I don't know about you, but I've got whiplash trying to keep up with the daily pace of developments in crypto so far this year. In prior bull runs, it felt like everything took turns hitting their mini-hype cycles. Now, everything is exploding all at once: DeFi, stablecoins, layer1 interoperability and scaling solutions, privacy, web3 apps, NFTs. Everything. It's one of the reasons we're building an analyst army at Messari, and opening up our research platform to new contributors. We've admitted a ton of new folks to the community in recent weeks, and will be continuing to accept community analyst applicants on a rolling basis. So if you know how to ELI5 a hidden gem asset, or do a crypto valuation model, or put together a sector comps table, we'd encourage you to apply and help us keep up with the absolutely torrid pace we've witnessed so far this year. Crypto's pace and Messari's pace show no signs of abating. Builders welcome. Devs. Analysts. Headlines that matter: INTEL: Yearn, Cover, Solana, LOOM, Kyber, UMA, Polkadot (+ 20 updates) Goldman survey shows 22% of respondents expect $100k BTC... (The Block) ...while JPM survey shows only 11% of institutional clients invested in crypto (The Block) BitMEX adding new trading services and custody (CoinDesk) GBTC discount at 12% after biggest drop ever (The Block) Pumping Iron (Arthur Hayes) Founder of ICO backed by Floyd Mayweather gets eight years in prison (Bloomberg) MicroStrategy purchases another $10m BTC (Michael Saylor) Daily Shade: Tech companies as necessary evils
Source: Ryan Selkis — Published: 2021-03-05T15:15:00Z
For the OGs and the newcoiners alike, here’s a starter pack that should help orient you around all the tools available at Messari. 1) CaseBitcoin is the ultimate bitcoin beginners' resource, with macro stats and charts, a deep library of curated content, and regular updates that put bitcoin's evolution in context. Here’s the case for bitcoin in a nutshell, directly from the home page: 2) Messari has a LOT of information. I’d encourage you to invest 30 minutes in setting up your home dashboard and watchlists, exploring our community charts and screeners, and (if you’re an industry professional) trialing our Enterprise tools. Without ever leaving the above-the-fold home dashboard you can: Create unlimited watch lists: to track your portfolio, facilitate sector diligence, copy-trade, etc. Search ranked asset lists by sector and time frame, and sort by gainers and losers Stream and filter protocol-level events by type (network change, listing, governance update) Sort research by category (and by analyst, asset, watchlist, etc. soon^tm) Toggle the front-and-center chart by asset, timeframe, and chart type for quick checks Discover anything in our data library, which includes thousands of asset profiles, research items, community screeners and charts, and other entities Parse fundamentals at-a-glance, including things like diluted market cap and on-chain data Spot high volume assets and assess real trade volume spikes over time Flag the assets our analysts are studying in Messari lists 3) Crypto research 101. If you need a research report on the macro case for bitcoin, ethereum, stablecoins, or crypto more broadly, or you need to understand what’s going on beyond the Western hemisphere (most of our audience), you can download our analyst deep dives and share them with friends and colleagues. These are five of the best overviews I’d send to anyone in my network looking to learn more about the top trends in the space. Bitcoin. Ethereum. Stablecoins. Crypto in Asia. And our annual mega-trends report, the Crypto Theses for 2021. A dedicated library to get people from zero to one. A command center to give professionals a second screen for accessing the industry. And the most robust asset research library in the industry. All from one trusted source. If you’d like to help us continue to build for the next ten years, DM me on twitter or drop an application. We’re doubling our engineering team, and building an army of analysts to tackle the challenge.
Source: Ryan Selkis — Published: 2021-03-04T15:30:00Z
Last summer, we opened up the Messari community analyst program to new applicants for the first time since 2018. We’ve scaled considerably since then, and our contributors have been a hit. So we're planning to expand the program in 2021. We just invited the next cohort of analysts, and will be accepting contributors on a rolling basis from now on. You can find the community analyst program overview here, along with an application form. To refresh your memory, the first order of business at Messari was a call to action for "a small army of volunteer analyst contributors / collaborators who will work with Messari on cryptoasset research and analysis as we boot up the industry’s “EDGAR" database.” We promised to hire the best contributors full-time as our lead analysts, and help to place the rest. Ryan Watkins, Jack Purdy, and Mason Nystrom are three of those community-turned-full-time analysts who have done particularly well. We doubled down on the program last summer by defining what great analysts look like: humble (pay your dues), hungry (produce relentlessly even when payouts are unclear), long-term oriented (willing to invest time for elevated status vs. cash comp), and loyal (that goes both ways! our community diaspora extends to crypto companies likeCoinbase, ConsenSys,and Eco; news / researchers like CoinDesk, The Block, and Delphi; funds like Grayscale, Multicoin, and Framework Ventures; and token projects like Solana). I’m excited to train and place the next 100 analysts through this program. There’s still much to be done to slash information asymmetries across the industry, and our community is one of the most powerful assets we have to accomplish that goal. Headlines that matter: INTEL: Cosmos, Stacks, PERP, ETH, Tezos, EOS, BNB, SOL, Celo (+ 20 updates) Must read: Messari’s Polkadot Primer from Mira and Wilson (Messari) Benchmark, Accel invest $50 million in digital collectibles platform Sorare (CoinDesk) Kraken negotiating fundraise at $10 billion valuation (CoinDesk) CoinGecko founder AMA notes Digital Artist Beeple's 5000-Day collection fetching $1.8 million (The Block) 1inch the latest to move to Binance Smart Chain amidst high gas fees (CoinDesk) Grayscale announces the future candidates for its investment trusts (Grayscale) JPMorgan says investors could add 1% of BTC to their portfolios (Bloomberg) Daily Shade: So much Binance shade in the Coinbase S-1!
Source: Ryan Selkis — Published: 2021-02-26T15:00:00Z
Huge day today with the news of the full Coinbase S-1. I skimmed the full S-1 and provided some takeaways / instant reactions in a tight thread here. Will post a summary of the other interesting perspectives that trickle out throughout the day today. This is a massive moment for the industry. We all should be celebrating. Enjoy, and to the moon! Headlines that matter: INTEL: Solana, Enjin, Sushi, Ethereum, Powerpool, The Graph, Zcash, Melon, Kava (+ 20 updates) Galaxy hits $1.2 billion in AUM (Bloomberg) Crypto.com says there are 106 million crypto users globally (Decrypt) a16z leads $25 million round in Optimism scaling solution (CoinDesk) New Chainlink release “brings 10x more data on-chain” (Decrypt) Daily Shade: CSW accidentally “admitted" to owning stolen Gox coins.
Source: Ryan Selkis — Published: 2021-02-25T16:00:00Z
I’m not saying these are no-brainers for me, or for you. But the convergence of stonks and crypto is likely to create some interesting, juicy looking long/short plays that “sophisticated” investors can tackle without necessarily taking “long bitcoin” exposure. There’s the basis trade, and the Grayscale trade, but there’s also the “crypto company” trade. That is, any traditional exchange-traded security that appears to trade at a premium vs. the underlying spot crypto market might be a short target to pair with an undervalued spot long. That has and will likely continue to bring more institutional investors into the space. Historically, you wouldn’t necessarily want to short GBTC or ETHE or BITW just because they trade at a premium to their underlying net asset values. Those quasi-ETFs are violently volatile, and there’a a better way to play the premium arbitrage game with them: simply by doing a private creation of new (borrowed) shares and waiting to sell the securities after a restricted period in order to collect the premium. It’s unclear how long this trade will last, anyway, as the premium is getting closer to flipping to a discount for the first time since 2015. The other way to look at this might be crypto companies whose valuations and/or revenues are tied to crypto’s price performance and volatility, and whether they are overvalued vs. the spot market. The sample size is too small for this to matter as a meaningful trading strategy right now. MicroStrategy offers a glimpse of what might be possible in the future, though. Last July, MSTR had a valuation of ~$1 billion. Since then, they raised $2 billion to acquire bitcoin for the company balance sheet. Thatbitcoin is now worth $4.5 billion, while MSTR's valuation has soared to $6.6 billion. That means the non-bitcoin equity value of the company is now up $1.7 billion or 170% from its pre-bitcoin status. Did MSTR magically become that much more valuable, or is its stock the new 35% GBTC premium? Headlines that matter: INTEL: Kava, Solana, BNB, Filecoin, Stacks, Ethereum (+ 20 updates) Uniswap: guesses on v3 rollout (The Block) Brave is building an in-browser DEX aggregator (Decrypt) Square reports $4.57 billion in 2020 bitcoin sales (The Block) Multicoin announces large position in RUNE (Multicoin) How Coinbase is worth $100 billion (CoinDesk) MicroStrategy adds $1 billion of BTC to balance sheet (The Block) There was $115 million in DeFi lending liquidations yesterday (CoinDesk) Alameda, CMS, Genesis invest $40 million into Swiss DeFi brokerage Oxygen (The Block) Daily Shade: ETH on pace to clear $1.6 trillion in transactions -Watkins
Source: Ryan Selkis — Published: 2021-02-24T16:40:00Z
_SUBSCRIBE Are you ready for some crypto IPOs! It looks like CoinShares will be the first major crypto asset manager to list publicly. Yesterday, they announced their intention to IPO on the Nasdaq First North Growth Market in Sweden with a target for March 11th under the ticker "COIN". (In addition to announcing a new DeFi Index token.) The prospectus shows two interesting things. 1. The revenue / profit figures are a bit wonky given reporting requirements for assets traded / under management, but looking at “Comprehensive Income” and changes to shareholder equity are the items to keep an eye on. CI for the first nine months of 2020 eclipsed full-year 2018, and we know anecdotally, that asset managers generally saw a doubling of first nine months revenue in Q4, with another likely double from there in Q1. That likely puts CoinShares at $30mm EBITDA for 2020, and $60mm run-rate. Given where Coinbase is expected to price, a 50x multiple on run-rate EBITDA seems possible, if not conservative for CoinShares. The company might come out at a $3-5 billion valuation with a target trading date of March 11. 2. If you want to get a sense for valuations of the other crypto asset managers, then you can take the March trading data and use CoinShares AUM as a proxy for the value of the other services. CoinShares actually tracks this in a weekly digital asset fund flow report. You can multiply CoinShares IPO valuation by 10-15 to get DCG’s fair value, or divide by 5 if you want to price Bitwise’s next megaround (who just this morning announced that they had cleared $1 billion in AUM themselves). It’s a good time to be hoovering up AUM and selling the vacuums. My sense is that these new crypto IPOs are going to add reflexivity to the already-hot cryptomarkets (this morning’s correction notwithstanding). Hot IPOs mean more interest in the underlying. More spot bidding, means more AUM and revenue for the newly public companies. I’m holding (but not levering!!) over here at diamond hands capital, and will try not to throw up along the way due to altitude sickness. Headlines that matter INTEL: USDT, LEO, Nervos, Crypto.com, NuCypher, XRP, KEEP (+ 20 updates) The NY Attorney General settles with Tether for $18 million (FUD is over) Galaxy to launch research unit led by Fidelity alum (The Block) India’s “Warren Buffett” backs bitcoin ban (CoinDesk) Gary Gensler nomination set for March 2 (The Block) DeFi liquidity provider snags $2 million (CoinDesk) Centrifuge raises $4.3 million from Galaxy for a DeFi bridge to real-world assets (CoinDesk) ECB wants to be able to veto stablecoins like Diem (CoinDesk) HEAT: All about the NFT market from Mason SHADE__: Balaji: BTC is the obvious long-term reserve alternative
Source: Ryan Selkis — Published: 2021-02-23T17:00:00Z
_SUBSCRIBE Here’s something I’ve learned the hard way: it pays to be honest about how much you can afford to invest in crypto. Not just initially, but over time as you rack up transaction costs, tax liabilities, and (if you’re using any sort of leverage) interest payments. If this sounds overly simplistic, it’s tougher to put into practice than it seems at first glance, especially since most of us try to black out our future tax liabilities when we’re in the middle of capitalizing on the full bull stampede, and interest / gas fees are merely the cost of doing business. But it can be disastrous to lose sight of your true balance sheet and P&L on the way up, given how rapidly things can unwind. We were reminded of how fast things can correct this morning. Since I suck at trading, but also like reaping the rewards of sticking out multi-year bear markets, I have a bull market regret minimization system that I use that’s easy enough for the back of a napkin. A lot of people are making gobs more money than me I’m sure, so this is not investment advice, so much as it is a set of “if you’re going to drink, I’d rather you do it at home” safety measures. Three steps I take to not ruin my life, but also capture upside if we go to the moon: 1. I like crypto, and believe in its 10 year outlook. I net out personal liabilities, INCLUDING GAINS TAXES, and take what I'm willing to lose today from that stack - let’s say $50,000, which I know is high, but may be a median stack for our Pro subscriber base and is easier round numbers - and put it in a big pile. Even though I want to trade aggressively, I’m taking 60% of that pile and sticking it in 80/20 BTC-ETH and forgetting about it for a year. If it doubles and I sell in a year and a day, I’m happy, and only pay a few grand in long-term gains. 2. I’ve got $20k left. Right off the bat, I’ve got a choice: pick assets? pick sectors? both? In my case, I’d probably want to pick sectors. Layer 1’s just rallied 3-5x. Is that a great relative value play vs. ETH anymore? What about Layer 2’s? Some of the best speculators I know are following the “hot ball of money” relative value trade theme to theme, with ruthless effectiveness. I try not to invest in last week’s meme if I "miss it.” If something looks long-term interesting, I’ll buy some even if it’s rallied and move it into bucket #1 to forget about. 3. I tend to take more risky, short-term bets early in the year because I have a ton of time to plan for the tax consequences and do later tax loss selling. If I get rekt on something, I can write it off against my winners. I’m not bashful about copy-trading crypto funds short-term because it’s a <70 IQ trading strategy and memetics are powerful. I don’t recommend any copy-trading strategy, but it’s a helpful diligence item. The flipside is that in a bear market, you’re getting dumped on by a whale. Do you think that’s very fun? This is about as close as I’ll ever get to a paid chat room with CAN’T MISS GEMS, and as you’ll see there’s no active strategy here, only downside protection recommendations. Crypto is risky. Don’t invest more than you can afford. Ride the blue chips if you decide you want sector exposure. Plan for taxes and fees, by minimizing the number of positions you have, and think about tax selling and memetics in a hypergrowth market. And for the love of god, don’t go short. P.S. if you take non-investment advice from a twobitidiot, and play it off as investment advice, sue yourself. Headlines that matter: INTEL: ALPHA, CREAM, BAL, AAVE, ETH, FET, FIL, XTZ, DCR (+ 20 updates) $1 billion of derivatives were just liquidated (The Block) ETH mining revenue hits $1 billion so far in February (The Block) Tencent & Ant backed banks are testing digital Yuan (The Block) North American bitcoin ETF raises $400mm in two days (Decrypt) More on NFTs: The Fat CryptoPunks Thesis BadgerDAO’s “Yield Dollars” CLAWS explained Daily Shade__: Cinematic genius from CMS Intern
Source: Ryan Selkis — Published: 2021-02-22T16:00:00Z
_SUBSCRIBE We were slammed this week with an influx of Messari Enterprise demand following our launch last week. (Check out what all the fuss is about.) I ran out of time for today’s above the fold, but will be back and better than ever after a recharge this weekend. Happy $1 trillion! Headlines that matter: INTEL: Zilliqa, ETH, Elrond, Mina, Flow, Polkadot, Kadena (+ 20 updates) Coin Metrics, KPMG, BitGo partner on new risk monitoring product (CoinDesk) Vitalik’s thoughts on crypto prediction markets during the U.S. election (Vitalik) Radicle raises $12 million to power a decentralized Github (CoinDesk) BitMEX’s Arthur Hayes returns with a new post (BitMEX blog) Gemini launches “Cryptopedia” Expert Network (Gemini) The Graph adds support for NEAR, Solana, Celo, and Polkadot (The Graph) Binance’s BNB token hits #3 in crypto market cap (The Block) Daily Shade_: Watkins on Pancake flippings.
Source: Ryan Selkis — Published: 2021-02-19T17:15:00Z
_SUBSCRIBE I posed what I thought was a pretty good question the other day on twitter, and got some excellent, thoughtful responses. It’s a sort of bookend to Tuesday’s post on the costliness of maximalism: "If you’re a BTC or ETH maximalist what wouldhave to happen to shake conviction in your preferred network?” Here were some of my favoriteresponses: For Bitcoin: + Market cap dominance reversal: “If BTC lost the number 1 market cap, it would shake a lot of maxi conviction.” and "Despite some of the common narrative of sharp crashes, I think that if Bitcoin failed it would be a slow gradual decline. a) Innovation and lightning slow/ fail; b) Adoption rate slows; c) Price has a slow prolonged bearish decline; d) Governments over-regulate; e) community loses vigor.” In other words, Bitcoin is innocent untilproven guilty. + Mining collapse causes security issues: "Price collapses far enough and long enough that ASIC mining becomes permanently unaffordable. This means something like a 4-year bear market at a pre-ASIC price... This would potentially destroy the security of the network. Without specialized ASIC miners, the network is fragile.” I agree. Network security in proof-of-work networks is one of those “hidden-in-plain-sight” risks that is perennially overstated, butpresents a legitimate geopolitical concern. (China) + Government attacks: “A reversion to the gold standard. Maybe if governments banned bitcoin for institutions and new central bank digital currencies backed by actual reserves.” This seems…unlikely. + Quantum attacks: "Quantum computers solving SHA-256 before we realize. Fraudulent transactions for months/years. Slow movement from the dev team to switch the Hash.” and "Speaking as a BTC maxi scientist, only a persistent double-spend could falsify my belief in the correctness of the Nakamoto Consensus thesis (and thus resolve the Bitcoin Experiment).” A lot of things will break in a world with quantum computing. Crypto double spends are the leastof our worries in that case. + Craig Wright as Satoshi: "Not a maxi, but if Craig Wright moved tokens from Satoshi's wallet.” At first glance, this would destroy bitcoin’s creator mythology, but prove to be a temporary (and perhaps net positive) shock to the system. I put the likeliness of this scenario at <1%, but if it did happen, than CSW certainly seems to be the type of “watch the world burn” figure, and I think uncertainty over his massive sales would curb institutional bitcoin interest. For Ethereum: + ETH Killers gaining traction: “If something like DOT, SOL, etc. made a fast trustless bridge and DeFi projects started migrating over and benefitting from cheap transactions at scale while ETH 1.0 thrashed around in scaling hell for another 1+ year, I’d probably jump ship.” and "If the main blue chips built on ethereum switch to ADA through the ERC-converter because there is no more value on using ETH until the next phase of ETH2 scaling. DOT is promising in the NFT space so I’d say a successful dapp / superfarm looks promising.” And "ETH - current DEFI/NFT's majors moving to other chains.” and “ETH - Other layer 1 blockchains become easier to develop for and cheaper/faster to use. Especially if crosschain solutions take off.” and "Other L1s moving first with innovation and unlocking value (hint: unlock staking liquidity).” and "If anything worthwhile was built on anything other than Ethereum, it could give me pause. So far... crickets... except for bridges to Ethereum.” Common concern, reflected in the 3-5x rally we’ve seen in six weeks for Layer 1 alternatives. + ETH2 scaling stall: "ETH2 is basically the binary future of ETH. It is another arpanet in it's current state, but it could evolve.” and "An ETH sharding interoperability apocalypse” This isn’t necessarily to the benefit of competitors. ETH2 breakdowns would constrict ecosystem-wide growth for the foreseeable future.I think this sums up my thinking for the most part as well, but it’s good to leverage the wisdom of the crowds.What do you think they/I missed? Headlines that matter: INTEL: Cosmos, Kava, Chainlink, YFI, Filecoin, Ethereum, KEEP, Flow, Cardano (+15 updates) Blackrock is dabbling in BTC Motley Fool buys $5 million in BTC for its balance sheet after writing it off 8 years ago ETH-backed stablecoin RAI is live (Reflexer Labs) Nic Carter on writing (for aspiring crypto analysts) What happens if all stablecoin users have to be identified (CoinDesk) Bill Gates updates outlook on BTC to neutral (CoinDesk) How to bring off-chain assets to DeFi (CoinDesk) Lamar Wilson gets Jack Dorsey support to create more Black BTC millionaires (Decrypt) Daily Shade: Roaring Kitty should get a medal, not a cross-examination
Source: Ryan Selkis — Published: 2021-02-18T17:00:00Z
SUBSCRIBE The crypto markets have obviously been hot, but what we’ve seen in DeFi, Layer1 protocol tokens, and NFTs year-to-date has been nuts. It seems like there’s two schools of thought at this point. On the one hand, there’s a belief that a correction in the long-tail is imminent. If for no other reason than many of these assets have 3-5x’d (or more) in the past six weeks. On the other, there’s the sense that we might be in a mini-period of consolidation while the markets take a breath. Sideways, but not down. August 2017, not Jan 2018. My sense is that if BTC/ETH keep rallying, other assets will perform similarly: it's much more difficult to beat the blue chips than it was six weeks ago. If BTC/ETH falter or the stonk markets correct sharply, then look out beloowwwwww. That leads to the same conclusion: it may be safer to be in BTC/ETH (and the super long-tail of speculative assets if you’re adventurous), than it is to ride (or FOMO into) the recent DeFi/Layer1 winners. Capped upside, big downside for the billion dollar also-ran networks, unless you think BTC dominance will drop below 60% or ETH Layer1 dominance will dip below 60% or DeFi’s miraculous ascent will continue unabated. It's a good time to HODL, hit the books, and plan for the next phase. If boom times continue, you’re ready. If a correction hits, you can go hunting vs. spraying/praying. I’m watching BTC as a shield for the rest of the crypto markets, and looking at relative valuations otherwise. (Layer 2 cheap vs. Layer 1. CEX tokens cheap vs. DEX. Etc.) Headlines that matter: INTEL: Cosmos, Kava, Bancor, Zilliqa, Solana, UMA, FLOW, Mina, ETH (+ 20 updates) Bitwise launches DeFi fund for accredited investors (The Block) Blockchain.com raises $120 million from top macro investors (CoinDesk) JPM thinks volatility will hamper BTC above $50k in spite of all evidence (CoinDesk) Saylor’s MacroStrategy may do another $900 million, actually (MicroStrategy) Most corporates still aren’t planning to buy bitcoin (CoinDesk) Mina Foundation launches with A+ new board (Mina) Lightning Terminal, a UI for Lightning Pool Liquidity (Lightning) At $80 billion valuation, Coinbase would be a top 15 global bank Daily SUN: We’re doubling our engineering headcount. Jobs here. $5,000 bounty for referrals. SUBSCRIBE
Source: Ryan Selkis — Published: 2021-02-17T15:30:00Z
I’m digging out from a long weekend, and catching up on a bunch of news and updates because crypto (very inconveniently) never sleeps. And I’m feeling reflective as we touch $50k bitcoin for the first time. In particular, I've been mulling over two things. One is the recent claim from Naval on Clubhouse (I didn’t hear it, but it doesn’t seem to have been disputed): “I’ve decided to actively focus on crypto for the rest of my career.” The other is the continued, rabid maximalism infecting otherwise sane and somewhat intelligent people -- in spite of all evidence that one asset zealotry is foolish. First, there’s Naval’s comment, which reflects my own thinking. Sure, it sounds obvious to make that “rest of my career" claim today, but that was far from the case as recently as 18 months ago. "Is “crypto” a career path, or are we lucky to have bitcoin and payments applications as our one miraculous invention?” was a legitimate question as ETH cratered, and ICO treasuries dried up. Then and now, it’s helpful to go back and look at prescient posts from folks like Naval, Fred Wilson, the Coinbase team, etc. whenever you’re tempted to write off the next big thing as an overvalued fad, or panic quit the correction. Here’s Fred Wilson on Bitcoin in 2011: So it seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come. The question remains if the Bitcoin algorithm or some other algorithm (possibly a derivative of the Bitcoin algorithm that deals with some of Bitcoin's weaknesses?) will ultimately win out. That's an important issue that has a lot to do with when this space becomes investable. But Bitcoin or something else, I'm confident we'll see the emergence of currencies that are not controlled by nation states in my lifetime. Whether that is a good thing or not remains to be seen. I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. And one of them is an interesting investment opportunity that we hope to participate in. Here’s Naval on Appcoins in 2014: Let’s posit a dozen new Appcoins. Using application-specific coins rewards the open-source developers with a pre-mined quantity. A TorCoin can be paid to its developers and gateways and by Tor users, achieving consensus via proof-of-bandwidth. We can allocate any scarce network resource this way – i.e., BoxCoin for Storage, CacheCoin for Caching, etc….Cryptocurrencies are electronic cash, and as such, will be used by electronic agents to exchange value, verify contracts, and track identity and reputation. All of a sudden, the computing resources spent by the Bitcoin miners doesn’t seem wasted – it seems efficient, given that it can be used for congestion control and routing of other network resources. Cryptocurrencies are an emergent property of the Internet – almost afifth protocol in the Internet suite. Here’s Coinbase on DeFi just last year! The Decentralized Finance (DeFi) or Open Finance movement takes that promise a step further. Imagine a global, open alternative to every financial service you use today — savings, loans, trading, insurance and more — accessible to anyone in the world with a smartphone and internet connection. This is now possible on smart contract blockchains, like Ethereum….While some of these concepts might sound futuristic–automated loans negotiated directly between two strangers in different parts of the world, without a bank in the middle– many of these dapps are already live today. There are DeFi dapps that allow you to create stablecoins (cryptocurrency whose value is pegged to the US dollar), lend out money and earn interest on your crypto, take out a loan, exchange one asset foranother, go long or short assets, and implement automated, advanced investment strategies. Bitcoin had just crashed to $2 (a 90%+ crash) when Fred wrote about bitcoin. It had crashed 60%+, the industry’s largest exchange had gone bankrupt, and Ethereum had yet to even run a crowdsale when Naval wrote about appcoins. Coinbase wrote a 101 on DeFi about 100x ago, after many 2017 ICOs had just cratered 90%+. It is costly to be a skeptic, but it’s obscenely expensive to be an active critic and short-seller of human creativity. It makes you wonder what maximalists have to gain, really, and the answer is pretty simple: many of the most vocal BTC-only, or ETH-only maximalists make money selling BTC-only, or ETH-only services. Divergence costs them clicks and money. I suppose that's obvious, and the same can be said of me (and Messari): we do well amidst a bull run across a wide range of assets. I will say that we at least call balls and strikes on everything. And we'd rather be on the open-minded side of the spectrum, which is, historically, the winning side. Headlines that matter: INTEL: ETH, LUNA, SNX, YFI, MKR, ALPHA, CREAM (+ 20 updates) MacroStrategy is at it again with another $600 million convertible note Bitcoin’s rise reflects America’s decline (FT) Options data shows institutions aren’t worried about correction (CoinDesk) Hot Topic: Bitcoin subsidizes energy production (Jimmy Song, Meltem) NFT Mania: Variant Thesis, Linda Xie Explainer, Binance Guide How crypto insurance can incentivize protocol audits (Delphi) Avalanche bug explainer (CoinDesk), Alpha Homora exploit (Post-Mortem) Dapper Labs raises $250 million at $2 billion valuation (CoinDesk) Ethereum’s HF1 is the first beacon chain hard fork proposal. Daily Shade: Maximalism is toxic for your wallet, mind, and soul.
Source: Ryan Selkis — Published: 2021-02-16T21:00:00Z