Jeff Dorman, CFA Profile picture
CIO @arca | Former COO of Harvest Exchange | Former Lehman, Merrill, Citadel | Huge Cleveland Sports Fan
KingTrippy🍌 Profile picture #ETH 🏴 and 👨‍🌾 and 🧙‍♂️ Profile picture Ricky Profile picture Denver Nowicz 🚢 Profile picture 6 added to My Authors
23 Jul
Following the proposed changes to the $SUSHI raise, below is an update for the Sushi community on Arca’s involvement, and our interpretation of the new proposed deal, as discussed yesterday on the community call with @OmakaseBar, @amytongwu
@0xChu & @Crypto_Alex17

Thread 👇
2/ As mentioned previously, Arca is one of the largest holders of xSushi. Our ownership of $SUSHI was the same as everyone else’s - we bought on the open market, and we ride or die with the success of the project and the community.

3/ Originally we had no intention of participating in this raise. Our only objective was to help protect the community by blocking a bad deal. We thought the original proposal hurt the long-term value of $Sushi by disenfranchising the community.

Read 32 tweets
17 Jul
Arca is vehemently against the value-destroying Phantom Trope proposal for $SUSHI.

Arca will backstop a new proposal with a first tranche bid price 31% above current TWAP price.

We have posted our proposal in the Sushi forum, and a summary is below 👇

forum.sushi.com/t/sushi-phanto…
1) Arca is one of the largest xSUSHI holders w/ 7.51% of the circulating supply. We bought all tokens in the secondary market, without lockups or discounts. We are customers, we stake, & and we have been very outspoken publicly, supporting the ecosystem.
2) Sushiswap does not need money, as indicated by @0xMaki himself. We agree that there is merit to diversifying the Treasury, but not at current depressed prices, and there is no justification for the size of a $60mm raise.

forum.sushi.com/t/sushi-phanto…
Read 14 tweets
15 Jul
There are many projects just like $AXS, w/ high user/revenue growth & favorable tokenomics. Most information is publicly available, & it has nothing to do with "the tech".

Axie was achieving success long before the token went parabolic.
Places to get this info? @tokenterminal & @DuneAnalytics to start

It's not rocket science why $BNB, $FTT, $AAVE, $SUSHI, $HXRO, $CHZ, $AXS, $UNI, $MKR, $NXM, $CAKE, $PERP, $MATIC & other revenue generating entities have been amongst the best performing tokens.
This industry glamorizes early stage VCs that find the "diamond in the rough" before the company actually achieves success.... meanwhile, there are tons of companies doing great things today staring you right in the face.

It's far easier to buy "what is" versus "what could be".
Read 4 tweets
28 Jun
Everyone is convinced that we've entered a digital assets bear market!

But we asked industry leaders, funds & traders what the bear thesis is, and there isn't a lot of substance.

In this week's "That's our Two Satoshis" via @arca, we debunk each one:

ar.ca/blog/crypto-ma…
Bear theses that we refute include (1-5):
1) CCP regime change is intent on killing digital assets
2)Massive regulatory pressure from the US
3) The Fed will be tapering soon and that is bad for risk assets
4) Retail momentum and interest is dead
5) Lack of institutional interest
Bear theses that we refute include (6-10)
6) ESG concerns
7) Tether, Celsius, BlockFi, Binance risk
8) Microstrategy is going to be a forced seller of Bitcoin
9) Grayscale (GBTC) unlocks are going to crush the market
10) Digital asset fundamentals are deteriorating
Read 4 tweets
15 Jun
Transparency update: We have periodically released public thoughts about select investments at @arca.

In the spirit of improving #transparency in this asset class, here is an update on these positions, and Arca's current involvement

$HXRO $CHZ $WNXM $EOS $SUSHI $LEO $GNO
1) $SUSHI

We loved it at $18.; we love it even more at $9. We have been large buyers over the past month, tripling our position with buys between $6 and $13, & we'll keep buying at depressed levels. We believe this is the cheapest asset in the market.

2) $WNXM / $NXM

We have not sold any -- and continue to add. At 1.07x book value, WNXM is basically a free call option on Nexus' growth, which we think will be massive. There's a reason 3 Wall Street firms have written on Nexus recently - it works.

Read 9 tweets
10 Jun
Hearing manymisconceptions about the $MSTR secured bond deal, what it means for $BTC, and many completely false narratives about "Will Saylor be forced to liquidate his BTC?"

Here's our interpretation of the bond covenants from the prospectus (h/t @MikeDershewitz )

Thread 👇
1) Collateral
Even though $MSTR says they intend to buy #Bitcoin, there is no promise or requirement to buy $BTC. This bond is a standard secured bond ($500MM) which is secured by all corp assets other than the first 92K BTC ($3.4bn @$37K) already purchased - that was carved out
The $500MM raised MAY be used to buy $BTC (which $MSTR said they will do), but the investing public should hold them to it if they don't. They are under no obligation to buy #Bitcoin.
Read 12 tweets
8 Jun
Every sell-off ends when a catalyst emerges... easy to find catalysts for things like $ETH (EIP-1559), $DOT (parachain launch) but what will be the likely catalyst for $BTC?

Here are 2 possibilities:
1) People constantly confuse "institutional buyers" w/ "fast money traders"

Ruffer, Blackrock, Minerd, etc - traders. They entered (unemotionally) when $BTC was cheap & underlevered ahead of catalysts (4Q20) & exited when expensive, overlevered, & lost its catalysts (2Q21)
But these traders made a lot of money, & will return (with others) when $BTC gets cheap again... when
- leverage is flushed (✅)
- fear gets too high (✅)
- fiscal/monetary stimulus continues unabated

Nowhere else to go with rates heading back to 0% & the USD going down.
Read 5 tweets
6 Jun
This tweet followed a 40 min call Joe had w/ @DavidNage & me

We had a rational discussion; same as we have daily w/ smart, successful investors who deploy millions into our funds.

Joe is not dumber than them; he’s just committed to a successful antagonistic anti-crypto schtick
I said tokens turn customers into owners & incentivizes USAGE of a protocol & product, not that it incentivizes buyers of a token. Thus, not a get rich quick MLM. It is a way to attract & retain customers. MLMs favor the rich sellers; pass thru tokens favor the everyday customers
If a restaurant gave out free food for a month, it would attract customers, but be a failed biz model unless the food & service was so good that they came back after it was no longer free.

Tokens create step 1; step 2 is up to the project, & many are now succeeding at retention
Read 5 tweets
23 May
Lots of people asking for my opinion right now... here's a quick and dirty thread 👇
First, think about what caused the rally since October 2020:

1) Low rates / low dollar

-- still very much in tact even though there are taper talks and inflationary data, rates and the dollar still have not reacted, which is still very bullish for risk assets
2) Inst money coming into the market

-- Inst money doesn't come faster or slower based on price moves. Those trying to deploy will still deploy, and they are. Though $GBTC & $COIN may have been leading indicators, as downward px moves show inst money was already slowing
Read 15 tweets
14 May
We believe $SUSHI is now the most undervalued token in digital assets.

A thread on valuation, upcoming catalysts, and why the recent downward price action will be short-lived Down pointing backhand index 👇
2/ $SUSHI has underperformed both $UNI and the broader DEX market since the beginning of the year.

This is most apparent with the 50% peak-to-trough decline in March and April (still down ~30% from ATH’s)
3/ Why? 3 Overhangs:

1) rolling 6-mo vesting unlock from initial Sushi yield farming
2) PancakeSwap growth
3) Uniswap V3 hype

Let's break each of these down -- none of which have any actual impact on $SUSHI valuation and its core business.
Read 23 tweets
15 Apr
A thread on thought process for special investing in digital assets .... courtesy of $LEO
Step 1: Identify a new catalyst (news, a merger, something unnatural...)

Image
Step 2: Analysis

The stolen funds probably not getting dumped that easily, how else could they monetize?

Read 8 tweets
30 Mar
Nexus Mutual ($WNXM) is the most undervalued token in digital assets & it's not even close. Trades at just a $23mm net market cap despite being one of the most utilized #DeFi projects.

A thread on valuation and upcoming catalysts 👇

(h/t @arca head of research @KatieTalati )
First, why does Nexus Mutual exist?

Digital asset builders are trying to build the car while simultaneously driving it. Fine in theory, but in reality, not laying key pieces of infrastructure early on can stymie growth & innovation.

For #DeFi, insurance is infrastructure
Insurance is a sleepy, boring business, but insurance in the case of #DeFi is also crucial to an ecosystem that is still being built yet already holds a massive amount of assets and is still growing (current DeFi TVL: $43 Billion).
Read 23 tweets
14 Jan
Anyone want to buy $BTC at a 47% discount to current prices? Here's how you can do it.

I can't believe I'm saying this, but $EOS might actually be the best risk/reward in digital assets right now due to their massive #Bitcoin holdings.

Thread time 👇
First, let's talk risk/reward. Over the past 2 years, $EOS is the only well-known token other than $XRP that is not higher. In fact, it has underperformed by a LOT.

Even other zombie projects are up 300-1000%

That's a nice start for an investment -- low downside, relatively
Next, the math:

Block One owns 140,000 $BTC. At $2.77, the market cap of $EOS is $2.6 bn, which is only 47% of the value of their BTC holdings.

That means by buying $EOS, you are actually buying $BTC at $18,771. Huge discount.

The question is "can you unlock this value"?
Read 14 tweets
7 Jan
Here's the problem. #DeFi can be valued based on cash flows. $BTC $ETH & layer 1s can not be. When something can be valued, it also creates a theoretical ceiling. That's why VCs often tell startups not to generate revenue - b/c once you have revenue, the valuation model changes.
That's why 80% of the Top 25 digital assets by market cap are such a joke, dominated by Layer 1s and cryptocurrencies with almost no chance of success - because this industry was founded by a VC mentality of "huge upside, low probability of success, but no way to prove me wrong"
$ETH and $BTC have already proven to be successful -- whether they are cheap or expensive is hard to know, but they have undoubtedly succeeded. Many DeFi tokens are definitely cheap, but price gains are somewhat limited by current revenues or multiples on future revenues.
Read 4 tweets
29 Dec 20
Anyone like great risk/reward setups w/ high upside, low downside & tangible floor value? @NexusMutual $NXM $WNXM

WNXM now trades at a NEGATIVE net market cap. So how did NXM go negative?

A lesson in book value & optionality 👇
2) First, h/t to @DegenSpartan who nailed the "sell call". Investors who focused on $NXM price & the MCR completely misunderstood how Nexus & the NXM token works (myself included).

But the short thesis is completely over and it's now an "all-in buy"

Nexus Mutual, like all insurance companies, has to keep a certain amount of capital in their pool to pay out future claims. What they do with this capital is how insurance companies make money.

Profits = Yield on float + premiums paid > claims paid & inv losses

Simple business
Read 6 tweets
30 Nov 20
"That's Our Two Satoshis" is out! This week, we take a look at the institutional adoption of digital assets

ar.ca/blog/crypto-ma…
Was it Paul Revere or Satoshi Nakamoto himself who said "The Institutions are Coming! The Institutions are Coming!"

Regardless, they are currently playing stickball in the parking lot while the pros are playing under the lights of Yankee Stadium.

ar.ca/blog/crypto-ma…
The growth in #Bitcoin products like the CME futures and Grayscale's trusts shows that institutions are here already, but these products have limitations, including not being open during volatile trading hours. This manifested itself during Thanksgiving.

ar.ca/blog/crypto-ma…
Read 4 tweets
20 Nov 20
Five random Digital Asset and #Bitcoin thoughts heading into the weekend

👇
1) Actively managed hedge funds and passive indexes built around high allocations to $BTC have a very short shelf-life. Investors now have the knowledge & means to buy $BTC themselves. Very soon, investors will specifically seek out digital asset HF strategies that own $0 in BTC.
2) Decentralized governance is less about ideology or risk transfer, & more about capitalism. Historically, there has been nothing in digital assets worth governing, but now, as #DeFi protocols are generating real revenues, there is something worth fighting over.
Read 6 tweets
17 Nov 20
Love the "Uniswap liquidity plunges" clickbait.

Facts: 4 Uniswap pools had more liquidity than needed to facilitate trading, & the excess liquidity left once $UNI farming ended. This doesn't affect volumes. TVL is pointless for Uniswap when there is more capital than needed.👇
Uniswap's TVL started going up at the end of August, & has now "crashed" back down to where it was 3 months ago.

But Uniswap's volumes peaked BEFORE TVL even increased, & volumes went down while TVL went up.

Volumes & TVL are not correlated when there is excess capital.
Yes, LPs are critical to Uniswap's success, but go look at CoinFlex if you think incentivizing market makers is the secret to success (hint, it isn't). You need customers too, and Uniswap's customers are much stickier than the LPs.

As long as customers show up, LPs will stay.
Read 5 tweets
6 Nov 20
Arca recently submitted a letter to the @gnosisPM Board of Directors requesting a formal response to our proposal (now 6 months old) that Gnosis tender for all $GNO tokens. We have also requested a seat on the BOD to ensure progress.

A thread and the actual letter below 👇
We are using Twitter to get a response because the @gnosisPM Board of Directors refuses to do their job. We hope talking publicly will empower other $GNO token holders to continue to demand action.

cc: @fintechfrank @benjaminopowers @MikeBacina @twobitidiot @Delphi_Digital
Gnosis is NOT decentralized. The @gnosisPM Board of Directors consists of:

Joe Lubin @ethereumJoseph
Jeremy Millar @OldDawgNewTrix
Martin Koppelman @koeppelmann

The BODs' job includes "accounting to the stakeholders for the organization's performance".
Read 20 tweets
30 Oct 20
A thread on Uniswap $UNI

The rationale for owning $ETH as an investment is that Ethereum is a clear market leader, w/ strong growth/usage, & tangible fee generation even though none of this value accrues to ETH token holders yet.

This is actually the same bull case for $UNI 👇
Uniswap is the clear market leader in DEX trading. Like "ETH vs smart contract protocols", there's not even a close second to $UNI in DEX Trading (courtesy of @DuneAnalytics)
With $ETH, EIP-1559 & ETH 2.0 are constantly in "the future", but the $UNI "Fee Switch" is happening w/ near certainty Feb 16, 2021 (180 days after governance began).

$UNI will then join a small list of tokens like $HXRO $MKR $FTT $BNB that accrue real value from earnings
Read 15 tweets
25 Sep 20
Attention token holders. Another week of unfulfilled promises & silence from @koeppelmann & @StefanDGeorge. Seems to be a trend.

Meanwhile, @arca continues to get feedback from holders who support our Tender Offer plan.

When will you respond @gnosisPM? Thread 👇
2) @koeppelmann & @gnosisPM still have not released a formal plan for community review on updated tokenomics, or on the Gnosis DAO that they teased. They stated in their discord that this was going to be released on Sept 9th. This is starting to feel like more empty promises. ImageImageImageImage
3) It is increasingly clear that the community is begging for a plan, whether that be a rebuttal to ours or a new token economic structure altogether. We encourage Gnosis to do right by tokenholders and take this responsibility seriously. ImageImageImage
Read 15 tweets