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
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.
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.
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".
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
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
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.
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.
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 )
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.
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
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
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).
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.
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.
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.
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.
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.
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
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.
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.