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
I’m still not sure anyone truly appreciates just how crazy this bull market is about to get. The only real remaining constraint on crypto growth will be from political headwinds and aggressive negative incumbent lobbying efforts. I’ve written this before, but we’ve already entered the “then they fight you” period. Three things stood out to me in the past couple of days, in particular. They are notable because they (inexplicably) weren’t even on my radar until I saw them hiding in plain site. BTC-ETH is now bigger than a) the top five U.S. banks combined, b) the top five Chinese banks combined, c) the top 10 rest of the world banks combined, and d) all public companies except for the MAGAs (Microsoft, Apple, Google, Amazon) and Saudi Aramco. As a former JPM banking pee-on, it is pure bliss to see BTC at 2x JPM market cap and climbing. I like this site. At current volumes, Binance is bigger than NYSE parent Intercontinental Exchange in terms of both revenue & profitability. With a 10bp blended trading fee (this is just spot volumes, not to mention all other revenue lines), Binance does $10bn++ in run-rate revenue with insane margins. (We have a clean spot volume filter here.) It’s likely that Coinbase will come out of the gates trading north of ICE in terms of market cap, too, and yet that business is still significantly smaller than Binance and Huobi. ICE and its brethren may have to buy itBit or Gemini or Bittrex in order to catch up, as they are the only exchanges ICE could afford if they don’t end up being content riding Bakkt all the way. And finally, bitcoin just tipped into the $1 trillion market cap club on a "fully diluted" basis. There are now thirty $5 billion+ networks on a fully-diluted basis, and sixty liquid unicorn networks, which is twice as many as we saw in the previous peak in January 2018. And climbing rapidly. (Check out this screener to keep tabs on the three comma club.) My sense is that the hot ball of money is just picking up speed. There will be corrections along the way, but from what heights? Have a nice weekend, and 新年快乐! Headlines that matter: INTEL: ALPHA, CRV, KNC, AVAX, COMP, 0X, FET, KIN, YFI (+ 20 updates) Jack Dorsey & Jay-Z fund bitcoin development with 500 BTC (The Block) JPMorgan employees are clamoring for crypto (CoinDesk) Valiu raises $5.25 million to expand LatAm crypto remittances (Decrypt) Reflexer Labs raises $4mm to scale RAI stablecoin (CoinDesk) Kraken launches investment arm to keep up with rivals (The Block) Jed McCaleb sold $69 million of XRP in a week (Decrypt) Polkamarket prediction market plans initial DEX offering UMA launches KPI options and a proposed airdrop (UMA) Daily Shade: Bitcoin is for money makers, not losers like Uber
Source: Ryan Selkis — Published: 2021-02-12T15:00:00Z
For three years, we’ve worked hard at Messari to standardize data on top cryptoassets and their underlying protocols. We’ve engaged with countless communities to compile high-fidelity project histories, technical overviews, stakeholder maps, economics details, and governance designs for major protocols in a single open research library along with markets data and tools for crypto professionals. Today, we’re excited to share the culmination of much of our early work with the release of Messari Enterprise, a comprehensive new platform that combines our existing best in class data with a new suite of tools and alerts to monitor key updates for 100+ networks and assets. We built this tool to help users understand how the crypto markets are evolving and how each network change (or proposal) might impact the assets they own and support. Prior to Messari Enterprise, tracking these updates required spending countless hours across disparate communication channels like Twitter, Telegram, Discord, forums, and GitHub. Now users have a professional team dedicated to keeping them up to date. Messari Enterprise counts 125+ top crypto organizations as early subscribers, including infrastructure companies (Coinbase, Anchorage, BitGo, Fidelity, Fireblocks, Chainalysis), investors (Blockchain Capital, Blocktower, CMS, Polychain, Framework, Multicoin), and crypto projects (Aave, Synthetix, Cosmos, Solana, Filecoin, NEAR), who leverage the platform to keep tabs on meaningful day-to-day project developments amidst a sea of noise. We make it easy to create custom alerts; sort asset updates by category, sector, and importance; and streamline research for 100+ top projects. Our early customers have benefited already from Messari Enterprise by using us to track: Novel Attacks: We monitor multiple project communications channels to identify potential bugs, hacks, or exploits across our universe of covered assets. In October, we quickly updated our users on a Maker governance issue which introduced the potential for attackers to leverage flash loans to game votes; in December, we tracked an update from the Geth (ETH) team which outlined a potential DoS vulnerability that could impact Celo mainnet clients (a fork of Geth); and last week, we alerted users to real-time developments in an exploit impacting Yearn Finance’s yDai vault (and subsequent patch and resolution). Software Releases: We track upgrade proposals with notes on target dates, implementation details, and/or security concerns. In December, we flagged Filecoin’s Lotus v 1.3 network upgrade as a consensus-breaking release, and highlighted how network operators could upgrade their nodes, download the new release, and restart their operations. We help teams avoid unwelcome surprises that come from running deprecated node and wallet software, and keep them plan ahead for upcoming releases. Governance Tracking: We have the industry’s most comprehensive portal through which stakeholders can review critical project governance updates. DeFi can get especially noisy and complex, but our team tracks network fees and token distribution changes, collateral additions, proposed software upgrades, security parameter adjustments, and more for Maker, Uniswap, Aave, Compound, Sushiswap, and dozens of emerging networks with nearly $40 billion in locked protocol value. We highlight both ongoing votes as well as those proposed for discussion to make sure you know how you can be impacted. Token Swaps: This fall, Aragon worked to deprecate the Aragon Court (ANJ) token and allow holders to swap ANJ for the native ANT governance token. An initial swap proposal from the Aragon team was ultimately withdrawn and resubmitted with new terms, which led to a temporary arbitrage opportunity based on the adjustment to the proposed ANT redemption price. Conflicting information was disseminated across on-chain votes, official Twitter channels, and the Aragon governance forum. We tracked the updates in real-time and ensured our users had accurate real-time information and a chance for significant gains in a short time period. Network Outages: In early December, the Solana network suffered a temporary shutdown. A post on the outage in the Solana Discord was immediately picked up by the Messari team who flagged the alert and sent a push notification to Enterprise subscribers within minutes of the event. Our analysts later posted two additional updates providing users with details on how they could restart their nodes and access the current state of the network. We encourage you to check out the release for yourself and see how Messari Enterprise can help ensure that you or your team never miss a critical update. This is merely the beginning of what we have planned for our Enterprise subscribers, and we think you'll like what comes next! Want to learn more? Join us this afternoon at 1 PM EST for a product walkthrough and panel discussion to learn how the teams at Blocktower, Chainalysis, and Coinbase utilize Messari Enterprise in their daily workflows. Register here! Headlines that matter: INTEL: MKR, CRV, UMA, OCEAN, REN, KEEP, ATOM, SOL, LUNA (+ 20 updates) Yellen spins the “crypto for money laundering & terrorism” yarn (CoinDesk) Bitcoin comes to America’s oldest bank BNY (WSJ) Three Arrows & DeFiance Capital invest in Balancer Labs While Twitter CFO discusses a potential balance sheet allocation (The Block) BofA: Anti-privacy regulations pose risk to crypto (CoinDesk) Mastercard to process stablecoin transactions for merchants (CoinDesk) Amazon is launching a digital currency project in Mexico (CoinDesk) Mark Cuban: “Bitcoin is America 2.0” (Blockworks) Daily Shade: Galaxy makes more in a day than all of 2018
Source: Ryan Selkis — Published: 2021-02-11T15:00:00Z
Mason had a good tweet this morning: "Can weall agree, finally, that Consensys has a great business model?” He was referring to the staggering growth at Metamask, one of ConsenSys’ core bits of infrastructure. But the sentiment also happens to echo something I wrote last year about the New York-based, ETH-heavy infrastructure startup that sent me paychecks for a few months in late 2017 as an entrepreneur-in-residence.In the 2020 crypto theses, I wrote: "There are few companies you could argue are existentially important to Ethereum, but Joe Lubin’s “venture production studio” is one of them. They had a brutal end to 2018 with hundreds of layoffs and project spinouts as the price of ETH plummeted. But I said last year that “rumors of ConsenSys’s death have been greatly exaggerated,” and that seems to be directionally correct, even though ETH is flat on the year. The company’s infrastructure companies are all well-funded, even as the side bets and fat have been cut. No one has ever increased their risk by focusing, and ConsenSys is no different. A cursory look at their home page highlights the new logical orientation of the business. I expect a big 2020 from them, and wouldn’t be surprised to see a nine figure investment from a strategic partner like Microsoft." In the end, it wasn’t Microsoft, but JPMorgan that made a strategic investment in the business. Regardless, it’s clear the business has rightsized and streamlined focus. Metamask has 4 million users and mid-eight figures of run-rate revenue. The Quorum-Hyperledger enterprise team is bridging the gap with “blockchain not crypto” institutions. Infura still powers a good chunk of the Ethereum and IPFS networks. And CodeFi, ConsenSys diligence, and the firm's other technical consulting services are even better (and, again, much more focused) than they were four years ago. That’s not to mention that Uncle Joe’s ETH coffers have swollen 20x since December 2019, putting the company on (perhaps permanently) solid footing. Everyone likes a comeback story. Still, ConsenSys’ resurgence has been quiet: overshadowed by the DeFi applications it's powering. Headlines that matter: INTEL: SNX, AVAX, OGN, DOT, GRT, SUSHI, CREAM, RUNE (+15 updates) Celo raises $20 million from a16z, Electric Capital (CoinDesk) Speaking of ConsenSys, they launched an update of AirSwap (CoinTelegraph) Spartan Group launches $50 million DeFi venture fund (The Block) Overview of Synthetic Assets on Mirror Protocol (The Block) Jim Cramer says all corporate treasurers should be thinking bitcoin (CoinDesk) Polygon (fka Matic) releases layer 2 software development kit for ETH (CoinDesk) The nine largest public company crypto portfolios (Decrypt) What people get wrong about bitcoin’s carbon footprint (Bloomberg) Daily Shade: Jeremy Allaire as Mini Me is something amazing I can’t unsee
Source: Ryan Selkis — Published: 2021-02-10T15:00:00Z
I’ve seen some analyses floating around recently that put ETH gas fees and DeFi application fees in the same bucket. That doesn’t make any sense. High Layer 1 fees don’t represent sustainable network earnings power, so much as they highlight temporary throughput bottlenecks. Evidence that we’ll soon operate in a multichain universe with cross blockchain bridges that least cost route transactions between protocols. In contrast, high DeFi network earnings (real earnings that is, netting out short-term farming rewards) usually indicate healthy, liquid marketplaces. A 25 bp fee to market makers plus 5 bps to the underlying protocol treasury is a logical decentralized exchange or asset management model. You're probably willing to pay those fees in return for non-custodial trading, deep liquidity, and broad asset availability, since the fees are variable based on trade size. Gas fees are a different animal, a fixed cost that eats into the economics of every single transaction, and prices out smaller market participants. Some argue that EIP-1559, the network change that will burn gas fees to the benefit of ETH holders, should lead investors to value ETH more highly since you can extrapolate the net present value of those burns based on the Ethereum network’s growth. That seems like a compelling valuation model for ETH bulls given the Ethereum network is now generating $25-30 million in fees per day. But it also ignores the reality that Ethereum’s scaling plans explicitly call for pushing transactions off of the expensive, gas-guzzling main chain and onto roll-up chains (or competitive layer 1s). That’s one reason Layer1’s like Cardano, Polkadot, Cosmos, Avalanche, Solana, Algorand, and NEAR, and Layer 2 chains like Matic, Skale, Loopring, and xDai have outperformed ETH so far this year. Headlines that matter: INTEL: ALPHA, YFI, COMP, AVAX, AAVE, BAL, SOL, MKR, ATOM, PERP (+ 20 updates) St. Louis Fed features a DeFi research paper (St. Louis Fed) Chainbridge will bring DeFi to Avalanche; long live bridges (The Block) Speculation builds that Apple will be next to buy bitcoin (ZeroHedge) Bitwise files ETF application to track “crypto innovators” (The Block) Axie Land has record $1.5 million NFT sale (Decrypt) Binance drops its defamation suit against Forbes (The Block) Nic Carter’s Castle Island Ventures raises $50 million fund II (Blockworks) Daily Shade: What can I say, gas is expensive.
Source: Ryan Selkis — Published: 2021-02-09T15:00:00Z
In a one-liner – it’s the next era of the Internet. Web 3.0 (commonly called Web3) is a paradigm shift towards a more democratized Internet. Web3 manifests through new technologies, such as cryptocurrencies, virtual and augmented reality, AI, and more. Empowered by new technologies, the Web3 movement is spearheaded by a shift in how we, the collective, view and value the Internet. Web3 is about creating an Internet that works for the people, owned by the people. Before There Was Nothing, Then There Was The Internet The Internet has fundamentally altered the world as we know it. This is not a controversial statement. Although it’s worth emphasizing because it is shockingly understated – the Internet changed everything. Find an issue or topic that you care about today and – whether it’s economic, political, or social, – a quick Google search will show that the Internet has fundamentally reshaped or transformed that issue. Economical – the Internet is directly responsible for the rise of globalization and eCommerce, two trends that have deeply impacted the world. More specifically, over the past three years (2017, 2018, and 2019), the S&P 500 Tech sector doubled in value, and today technology sector stocks account for around 25% of the entire S&P 500 Index. Social – this one is quite obvious, hell, even the word “social” has a new meaning compared to two decades ago. Once young startups, Facebook, Google, Instagram, and Twitter, now receive upwards of 40% of venture capital dollars in the form of ad spend from new startups. The potential future impact of new platforms like TikTok is still undecided, yet promising for social media influencers. Political – Algorithms that offer cherry-picked news and are designed to incite than coalesce have become the norm. The Internet has affected political elections around the world and given rise to a new generation of bureaucrats who are Internet natives. The Internet changed everything – financial markets, culture, elections, everything. There are so few exceptions to this rule that it might as well be a law of nature. A decade or two from now, events stemming from or directly caused by the Internet will have shaped the world multiple times over. This is why the fate of the Internet has become more important than ever. Why We Need Web3 The early years of the Internet were exploratory in nature. Similar to the ideology of Manifest Destiny – the belief that the expansion of the US throughout the American continents was both justified and inevitable – early tech pioneers explored, sequestered, walled, and commoditized the Internet. Over time, the Internet has remained “free” yet corrupted. You probably see this in your life when you try to purchase a bus, train, or airline ticket. All of your searches are logged, sold, and manipulated against you. The Internet is yours to use, but you are not its master. Individuals around the world face even greater challenges, specifically in countries where the Internet is partially walled, restricted, or blocked entirely. The hallmark trait of the Internet was the democratization of information, yet today, information is increasingly unreliable, siloed, and in some instances downright harmful. Fake accounts controlled by bots are manipulating children. Realistic human faces created by AI will create even larger problems for society through deep fakes and identity theft. Fake news accounted for economic losses over $70 billion in 2019 and will only increase over time. The human condition for virality has given rise to digital viruses – false news stories – that travel six times faster than true news stories. This trend has extreme implications. A World of Open Protocols Web3 is about rearchitecting the existing services and products of the Internet so that they benefit people rather than entities. While it’s impossible to predict the future, one vision of a Web3 world is one that has open-source protocols at the foundation while businesses act as interfaces that provide convenient access and additional features. Web3 is an internet that is open for all users, built on open protocols and transparent blockchain networks. The way consumers interface with these protocols might be through blended applications that offer convenient ways to interact with the underlying technologies. Data will still be used to drive decision making but will not be used against the consumer. Data rights will be protected rather than stomped over in search of profits. Incentive and market mechanisms will help ensure that information is trustworthy and verifiable. A Web3 world will prioritize the sovereign individual rather than the wealthy elite and rent-seekers of the world. The rearchitecting of systems and protocols will focus on democratization and decentralization. What Are Examples of Web3? Web3 is more nascent than DeFi and so, naturally less concrete examples exist. However, just as finance has various applications like lending and borrowing, the internet consists of various services and components. Internet Architecture and Services The architecture of the internet isn’t something most individuals think about. Your internet either works, lags, or is offline. But you probably understand that Comcast and AT&T or your ISP (internet service provider) is ripping you off, promising fast connection, and then either charging you an arm and a leg or rugging services from you that used to be free. New services like Andrena and Althea circumvent these existing internet providers by creating community networks where individuals can operate and get paid to provide internet to members within their community. For example, a landlord or tenant owner could invest in an Andrena hotspot to enable all of their tenants to join the Andrena wireless network and pay the landlord for individual data consumption. Alternatively, an apartment renter could purchase a smaller hotspot and provide enough internet access to their neighbors in order to offset their personal internet consumption. Other blockchain networks like Handshake as well as companies like Unstoppable Domains aim to democratize the existing Domain Name System (DNS) which maps an IP address to a human-readable address like Messari.io. The DNS registry is controlled by organizations like Verisign and ICANN and have unilateral control to enforce IP rights, censor free speech sites like WikiLeaks, and seize domain names (IP addresses) without due process. While not all of these instances of censorship are negative, the subjective nature of it all is concerning. Oftentimes, the DNS decision-makers are those at the highest levels of government and lobbyists of the largest multinational organizations, who may intend well but do not always act in the best interest of the public. Data Storage, Distribution, and Monetization Twitter allows you to download all of your data. This is wonderful until you actually download the data and realize that you have absolutely no idea what to do with it. I mean, it’s your data. You should be able to draw insights from it, right? The problem is, data is hard to monetize at the individual level, but easy in aggregate. Robinhood generated nearly $300 million in revenue from selling customer order flow data in the first half of 2020. Dozens of companies understand this concept, which is why Snapchat loses money year over year, but investors understand the company has millions of Gen Z users who generate (potentially valuable) data. Organizations like Ocean Protocol, Streamr, and Numerai are building protocols that enable open data markets where anyone can share or monetize their data. Data is a fundamental component of how value is stored and transferred across the internet. The commoditization of data has yet to be achieved because data is siloed, sensitive, or proprietary. New Web3 protocols provide a means for markets where sensitive data can be shared and proprietary data can be accurately priced and sold. Turning data into tangible data assets (tokens) will unlock value, developing a more robust data ecosystem. Another key component of data is storing it across servers, which is predominantly controlled by a few large companies. Decentralized data storage and web hosting services like Sia, Arweave, and Filecoin are supporting the creation of new decentralized applications. Applications and Other Internet Infrastructure Services You use so many services that you probably don’t even realize it. WIFI, location services (GPS), Bluetooth connectivity, messaging services (iOS, Android), video and audio streaming (Youtube, Twitch, Spotify), etc. A few stakeholders control all these applications. More importantly, these apps utilize services and infrastructure that are centralized or controlled by a few large companies (e.g. Google, AWS, Microsoft). New protocols and companies like Helium (open wireless network), Foam (open location services), Livepeer (video transcoding and streaming), Orchid (distributed and private VPNs), and more are all building distributed and community-operated services. These community-owned and operated services are cheaper because they’re able to avoid middlemen. For example, Youtube and Twitch aren’t just content distribution engines. The streaming giants provide "free" data storage for all videos from content creators. Youtube and Twitch also assist with video transcoding to ensure viewers can consume a particular video in the required format. The ability to provide all of these services seamlessly helps ingrain content producers into each platform. Web3 protocols can distribute the power of a single firm by unbundling the services that firms provide to users. Audius (music streaming), OurZora (open media market), Mirror (decentralized publishing platform) are all creating platforms where users own the content they produce and have a say in the governance of these platforms. In the future, content creators will be able to publicly store their data separately from where it is consumed. While these services are less convenient today, in the future they will be built into the underlying platforms you use on a daily basis. Final Thoughts on Web2 And the Transition to Web3 It’s easy to be dissatisfied and angry at the corporate elites, governments, or anyone who manipulates the Internet in order to benefit themselves. While understandable, I don’t think that’s the right sentiment. Originally, the Internet needed pioneers and businesses to develop tools to make the Internet accessible, and they were rightly rewarded. As long as the existing design of the Internet proliferates, we will continue to give up our data, time, and money to the major tech corporations in exchange for convenient products that promise free access. And to be honest, there isn’t one solution that will act as a panacea for all these issues. It will take a myriad of attempts, shifts in consumer behavior, and technological innovations. As we approach a world increasingly controlled by technology, it’s vital that we design systems that realign incentives in favor of the collective. The transition from the existing Internet – Web2 to Web3 – is a multi-decadal process that will fundamentally shift how we interact with the Internet. The decisions and work being done today will cascade and influence future generations. Much like the financial revolution led by DeFi, the Web3 revolution is inevitable, and one that will advance gradually, then all at once.
Source: Mason Nystrom — Published: 2021-02-09T13:00:00Z
Once Elon Musk changed his twitter bio to #bitcoin, it seemed “inevitable” that he’d make a sizable bet on the currency. We just didn’t know how large it would be. Today, we got our answer as Tesla announced that it has purchased $1.5 billion in bitcoin for its balance sheet, representing ~15% of the company’s net cash. I suppose this is cause for celebration, but I don’t feel the need to dwell on it. Instead, I’m thinking “what’s next?” Bitcoin and Ethereum have seemed like inevitable growth stories since the COVID fiscal spending surge, DeFi summer, and ETH 2.0 launch. I’m spending much more time thinking about what the future has in store for CEX/DEX tokens, on-chain lending, asset management, cross-chain infrastructure, NFTs, Web 3 assets, algorithmic stablecoins, and other new applications we haven’t yet imagined. When BTC is your checking account, and ETH is your high-yield savings account, it pays to look beyond the crypto reserves for new opportunities. Fortunately, we’ve got the best team in the game covering those bases daily, and making sense of the crypto frontier. If you haven’t already, you might want to redeploy a sliver of the 10%+ pop in your crypto checking to unlock all of Messari's Pro features. You’ll thank us later. 🙂 Headlines that matter: INTEL: Stacks, Terra, Loopring, YFI, Curve, Powerpool, PERP, Balancer (+ 10 updates) Tesla buys $1.5 billion in Bitcoin; Bill Miller may buy up to $300 million GBTC Ethereum Futures launch on CME (CoinDesk) OCC grants provisional banking charter to another crypto company (The Block) CoinDesk launches CoinDesk TV (CoinDesk) Dapper Labs’ NBA Top Shot sold $2.6 million of collectibles in 30 minutes (Decrypt) Glenn Greenwald on Journalistic Tattletales and Censorship at the NYT (Greenwald) Paradigm has a security-focused coding competition and leaderboard (Paradigm) Also, some thoughts from Charlie Noyes on Miner Extractable Value Daily Shade: Snoop Doge
Source: Ryan Selkis — Published: 2021-02-08T15:00:00Z
Short post this morning, because I’d prefer to re-share and underscore Balaji’s excellent post from this week on why India should "buy bitcoin vs. ban it." The argument is thorough, punchy, and compelling, and I keep thinking about the potential for countries who make the (logical) first-mover leap into crypto. The Michael Saylors of big governments if you will. What’s happened in Singapore, Portugal, Wyoming, Miami, etc. with respect to crypto friendly regulation feels like kindling. At some point, a big democratic government will stop and say: “why aren’t we taking this more seriously?” They'll change the course of their economic and geopolitical fate for decades by embracing crypto and the influx of talent and capital that would come with it. India feels like the most exciting candidate to prosper from the crypto tech boom. I hope logic and free markets prevail and they capitalize on the generational opportunity. Read the full post from Balaji. And have a good weekend. Headlines that matter: INTEL: YFI, DOT, UMA, KEEP, CVP, SOL, AVAX (+ 20 updates) The Rise and Fall of BitMEX’s Arthur Hayes (Vanity Fair) DAOs may soon be permitted to register in Wyoming (The Block) TokenSoft will trade Digital Securities on tZERO (CoinDesk) Yearn Finance exploit drains $11.1m from vault (CoinDesk) Silver Lake’s Glenn Hutchins launches $72m crypto fund (Yahoo) CoinMetrics says the “real bitcoin supply” is only 14.5 million The See Something, Say Something Act (“SS" for Short) RIP productivity: The Great Suspender suspended for malware Daily Shade: We’re hiring college dropouts, too.
Source: Ryan Selkis — Published: 2021-02-05T15:00:00Z
The day we launched in January 2018, I sent an email to prospective investors that I had worked with in the past explaining the “why” behind Messari. I led with this: “The primary question [Dan and I] have today is how can people invest intelligently and responsibly in crypto amidst so much noise? We (like most of you, I'm sure) were taken off-guard by the euphoria and excesses of 2017. Yet even if we're bearish in the medium-term and ¯\(ツ)/¯ in the near-term, we remain extremely bullish in the long-term. We like the crypto money use case, and think that one of those assets will eventually overtake gold and become a new global reserve. We like the "smart securities" use case, which hasn't really emerged yet, but which we think will be a significant innovation - a new, dynamic, and more liquid type of asset that doesn't fit neatly into any existing bucket of a corporate balance sheet. We like the utility token use case insofar as it will fund some exciting new tech teams, but think the tokens themselves are overvalued by orders of magnitude. When they crash -- and the crash will be vicious -- we think some of the better teams will try to convert their tokens to "smart" securities. [Note: “DeFi” = “smart securities."] This cryptoasset "barbell" mental model informs much of our vision and strategy for Messari in the years to come. And we share it in the hopes that it will help you better understand how we plan to tackle the opportunities that present themselves in bull and bear markets. We start with the mandate to better organize cryptoasset information. Our goal is to lead the transition from a sentiment-driven to fundamentals-driven cryptoasset market. Whether that is by working to self-regulate [via standardized disclosures], providing research and analysis tools [via subscription products], or ultimately advising teams or managing capital, we know we need to start simply: by defining what fundamentals might even look like for this new asset class and improving data integrity and transparency standards now." Three years later, we’ve built one of the best data ingestion engines in the industry and pull from market-leading data providers like Kaiko, Coin Metrics, Flipside, CoinGecko, The Graph, and more. But we also recognized early on that qualitative data moves markets. Project stakeholders, proposed economic designs and distribution policies, security audits, strategic integrations, and development roadmaps matter more than on-chain data at the earliest phases of project development. Having worked with 100+ crypto projects via the Messari Registry initiative, and built a massive research community, we’ve built the pipes to systematically ingest and curate high-signal, unstructured data from projects, and push updates to infrastructure partners, investors, and developers alike. Our new product, Messari Enterprise, is the result of the past three years of that cumulative work. It launches next Thursday (2/11) with 125+ top crypto organizations as early subscribers. Infrastructure companies (Coinbase, Anchorage, BitGo, Fidelity, Fireblocks, Chainalysis), investors (Blockchain Capital, Blocktower, CMS, Polychain, Framework, Multicoin), and projects (Aave, Synthetix, Cosmos, Solana, Filecoin, NEAR) are leveraging Messari Enterprise to keep tabs on meaningful day-to-day project updates amidst a sea of noise. It’s been a hit so far, and we invite you to check it out for yourself during our launch event here. Headlines that matter: INTEL: SNX, Kava, Barnbridge, Stacks, AVAX, UMA, Polkadot, Cosmos, CREAM, PERP (+ 20 updates) Opyn raises $6.7 million from Paradigm (The Block) NYDIG CEO says it expects AUM to 4x from $6 billion this year (CoinDesk) Why India should buy bitcoin (Balaji) PayPal has a new crypto division (Blockworks) A little bit about Bitcoin’s Taproot upgrade (CoinDesk) The Avalanche ecosystem (The Block) The Block founder, Mike Dudas leading stablecoin BD at Paxos (CoinDesk) Terra launches $10mm DeFi fund (CoinDesk) Daily Shade: Pump my bags, just don’t pump them yet. (NLW)
Source: Ryan Selkis — Published: 2021-02-04T15:00:00Z
I'm a big fan of Berkshire Hathaway’s Charlie Munger, and you should be, too. His witticisms offer a gold mine of insights for investors (crypto skepticism not withstanding), and I’ve written about Poor Charlie’s Almanack before. There’s also a Twitter bot with some of his best Mungerisms, and it spit out a great one yesterday: "The idea of caring that someone is making money faster [than you are] is one of the deadly sins. Envy is a really stupid sin because it's the only one you could never possibly have any fun at. There's a lot of pain and no fun. Why would you want to get on that trolley?" Timely! And it reminds me of one of crypto’s most famous NYT headlines from the last bull market: “Everyone is getting hilariously rich and you’re not.” With alts rallying by multiples in mere weeks, Ethereum breaking all time highs, and seed valuations getting bid up ridiculously, it’s easy to start flitting between trades, and lament your mere 100% returns last quarter. Don’t. I’ve learned three things from living through multiple crypto market cycles. 1) We’re all going to make it, fam. 2) A lot of dipshits are going to make a lot more money than you with much less effort, and no one cares. 3) Envy will make you do stupid things like trade out of good positions and realize ordinary gains. Which means that even when you make money gross, you lose money net. Best to keep a cleanly segregated reserve (BTC), high yield account (ETH), and speculative portfolio (alts), and ramp up holding times unless you are a professional trader. And to track your accrued tax liabilities trade-by-trade. The penalty for crypto envy (and frequent trading) tends to be much, much higher taxes, and shorter stacks. Headlines that matter: INTEL: Ren, Balancer, Celo, Cardano, Flow, YFI, Synthetix (+ 20 updates) Visa launches API Pilot with Anchorage targeting bank bitcoin customers (CoinDesk) Capital markets-focused Axoni raises $31 million from Deutsche Bank, UBS (The Block) Jeff Bezos letter to employees: "It remains Day 1." (Amazon) The Ren development team is joining Alameda A CBOE exec lays out the likely path to a bitcoin ETF (The Block) Balancer v2: Generalized AMMs Goldfinch: Crypto loans without collateral NYMag profile on FTX’s Sam Bankman-Fried (NYMag) Daily Shade: Someone will always be getting richer faster than you. This is not a tragedy.
Source: Ryan Selkis — Published: 2021-02-03T15:00:00Z
(TBI is out this morning. Watkins has things covered above-the-fold.) DeFi asset prices are soaring. The average DeFi asset is up 3x this past month, and we now have six DeFi unicorns: Uniswap and Sushiswap (decentralized exchange), Aave, Compound, and MakerDAO (lending), and Synthetix (synthetic assets). The current DeFi king, Uniswap, is worth $5.5 billion today, and nearly $20 billion on a fully-diluted basis, having processed $30 billion of trading volume in January. Insane. There’s real value flowing through these markets, and we’ve argued before that many DeFi asset valuations are supported by fundamentals (i.e. network earnings power) despite their sky-high sticker prices. This is especially true when considering long-term growth potential. Still, just how high are the ceilings for DeFi assets? Can they one day rival today’s largest global financial institutions, or are their ceilings structurally lower? That depends on three variables: 1) Global Reach 2) Market Structure 3) Value Capture Global Reach - DeFi protocols should scale more efficiently across jurisdictions than legacy financial institutions. Like the internet protocols we take for granted today (TCP/IP, HTTP), DeFi protocols are open standards for transferring value worldwide. They are not beholden to any specific jurisdiction; they are available everywhere (easy to access), yet have no physical “home” (hard to kill). That’s a deadly combination for a disruptive technology. Market Structure - Will DeFi be a “winner-take-all” market? This is the trillion-dollar question, and maybe the hardest to answer. It’s unclear how many winning protocols there will be per vertical, or whether “everything protocols” emerge that completely absorb their rivals. There are already some early signs that the latter is one potential outcome. Value Capture - Even if we assume DeFi scales globally and exhibits winner-take-most dynamics, it won’t matter for investors if protocols lack viable long-term value capture mechanisms. Open source development leads to low switching costs, so it's likely protocols will extract only minimal value from the services they provide, as competition will prove fierce. There’s a delicate balance in managing stakeholder incentives in DeFi, and it's unclear how much extractable value there will be (or should be) for token holders today or in the future. My take? I’m bullish that in 15-20 years, DeFi protocols will be far larger than our current financial institutions. Their ignorance of borders and democratized economics will help them scale globally much more quickly than incumbents would like. We’ll see at least some value capture from each new financial utility as protocol maintainers reap rewards for their contributions. And it won’t matter whether verticals become "winner-take-most" or “everything protocols”: investors could simply invest in vertical winners early on, and ride them as they eat the competition. The “everything stores” of finance will be much larger than JPMorgan. Headlines that matter: INTEL: Kadena, Keep, Compound, 1inch, Tezos, Sushi, Chainlink, Zcash (+ 20 updates) Coinbase taps Nasdaq for direct listing at $50 billion valuation (CoinDesk) Robinhood raises $3.4 billion in capital from Ribbit, a16z, Sequoia (Robinhood) Nic Carter on how obvious fake trade volumes are today IBM Blockchain team has been eviscerated by 90% (CoinDesk) SEC’s Hester Peirce says DeFi will be "challenging for us” (Forkast) The evolving landscape of Digital Governance (Mario Paul) MicroStrategy buys another $10mm BTC; now holding $2.5bn (Decrypt) Daily Shade: Scott Galloway says Bitcoin is the reason you're not getting laid.
Source: Ryan Watkins — Published: 2021-02-02T15:00:00Z
For those of you who have Clubhouse FOMO, I’m here to put your hearts at ease this morning. I spent a chunk of time on the app this weekend after ignoring it since last summer, and I learned a few things. First, while I’m glad I have access to Clubhouse, I probably won’t be using it that much as a passive listener just yet. It’s a big time suck, so unless you are a creator, you aren’t missing out. Much like early twitter, early blogging, early YouTube, etc. there are a lot of rooms where people are saying words without actually saying anything useful. It’s great for hangouts, but it's talk radio vs. high-signal, thoughtfully moderated podcasts. That’s novel! But not great for high-density learning. Second, that current gap means that there’s a ton of room for structured, interactive discussion to evolve within Clubhouse, and I’m sure as more creators spend time iterating, we’ll hear better content. The platform itself is worth the hype in terms of ease of use and audience discovery (not to mention the novel focus on voice). I'll spend more time hosting discussions there in the weeks ahead, but would prefer to rule with an iron first as a moderator, and always set a schedule, topic, and time limit. (Scarcity is value.) Third, Clubhouse is a great substitute for the conference cocktail conversations we’ve all been jonesing for. There are people within crypto that I really like seeing in person, but we’re not friends per se. I haven’t spoken with them outside of DMs in a year. I’m sure neither party would call for an impromptu chat. But the organic feel of “running into a person” on Clubhouse gave me the same vibe as running into a friend at a conference. There’s something big there, particularly if it ultimately becomes easier to float between rooms of 5-10 person chats vs. 100-200 person chats...like you would at an actual conference. I’m curious what others have thought so far as well. What would you like to see out of a good crypto Clubhouse community? (Also, here’s a good post on the future of social audio.) INTEL: Loom, Nexus, Alpha, Cardano, PERP, Polkadot, UMA, Filecoin, Nervos (+20 updates) Musk says bitcoin is a good thing in Clubhouse chat (Decrypt) Ripple files a meh response to the SEC’s complaint (The Block) BlockFi is the latest to register a bitcoin trust (CoinDesk) Binance had $500 billion in January trading volume (The Block) Uniswap had $30 billion in January trading volume (The Block) Kraken is running a Chainlink node and sharing its data (CoinDesk) The store of value generation is kicking your ass (Mark Cuban) Visa may add cryptos to its payment network (CoinDesk) Daily Shade: This guy cracks me up. New favorite follow.
Source: Ryan Selkis — Published: 2021-02-01T15:30:00Z
The past couple of days have been…weird. Fred Wilson called it the revenge of retail. CNBC has become a complete clown car. Some of the world’s richest men are overnight nouveau populists (e.g. Chamath), Dogecoin rallied 8x in a day for the memes, and there’s suddenly a feeling that maybe the “institutions" aren’t as smart as they think they are. After all, the smart money sure has missed a lot recently. They missed COVID. They missed Tesla. They’ve missed crypto. They forgot to make sure their short positions couldn’t be easily cornered. They underestimated retail sentiment shifts and populist anger. Basically, the smart money continues to miss exponentials, while getting paid 2/20 for picking up pennies in front of steamrollers - beating the market by 200 bps sometimes, then going bankrupt amidst volatility. The crowds continue to outperform expectations, and I still think they are underestimated. That brings me to two points. First, I’d encourage emerging analysts to escape their living hells of tradfi and apply to our community analyst program, which has been Messari's exclusive pool of candidates for full-time hires and contractors recently, and proven to be a career accelerant for those who've used it as a platform to spring into other killer jobs throughout crypto. We have a lot in store for this program, and this community will set the standard for producing high-quality crypto research that wildly outperforms any new legacy finance entrants that think they’ve got it all figured out. Second, I angel invested in Roll this fall, a platform for creating social monies, and something Bradley Miles (the founder) calls “user-generated capital.” Mason wrote about the value capture of social tokens earlier this week, and we wanted to have Bradley share his thoughts in this companion piece. User-generated capital is an emerging category that uses social money, NFTs, and DeFi as a way to grow the creator economy, and further decentralizes how talent is identified, incentivized, and rewarded. A lot of the ideas Bradley shares are sparks, and I’m fairly certain UGC will play a major role in further tilting the balance of power from corrupted institutions to more reliable individuals. Here’s Bradley’s piece (and a summary below). Have a great weekend! Headlines that matter: INTEL: Alpha, Cardano, YFI, Cosmos, KEEP, Ethereum Classic, Filecoin (+10 updates) Coinbase announced proposed direct listing Robinhood gets $1billion in emergency funding from investors Grayscale files for DOT, AAVE, XMR, ATOM, EOS, and ADA trusts (Decrypt) Elon puts bitcoin in his twitter bio. Market spikes. Blockfolio launches zero-fee trading powered by FTX (The Block) Facebook’s Diem processes 50 million test transactions (Decrypt) Ray Dalio warms to bitcoin (Bridgewater) Inbound interest has been off the charts: Community Analyst Application Daily Shade: The Winklevii went on a rampage yeterday.
Source: Ryan Selkis — Published: 2021-01-29T15:00:00Z