RelayNode NYC #51 - May 4 - Let 21M flowers bloom: IPO > ICO > IEO > IDO, DAO > LAO, SAFE > SAFT > SAFG.

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Written By David Gogel
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Welcome to RelayNode NYC Area edition! The NYC blockchain ecosystem is growing. Our goal is to harness its energy and innovation for the benefit of New Yorkers and provide a weekly curated list of interesting content, upcoming (virtual) events, & jobs.

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RelayNode NYC is curated by:  

David Gogel

Founder @GogelX/Definancier, Advisor @Paperchain.io, fmr Associate @Techstars' Blockchain Accelerator, Co-president @Wharton FinTech, Corp Dev @LinkedIn @AIG

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Market Stats (as of Sunday, May 3, 11:00 PM EST)

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  • As US states begin to reopen their economies, new data released last week reveal the economic impact of COVID-19:

    • First-quarter GDP experienced a sharp drop of 4.8%, exceeding consensus estimates of 3.5%. Welcome to the worst GDP contraction since 2008.

    • 3.8M Americans filed for unemployment, bringing the total to ~30M.

    • Consumer spending dropped 7.5% in March, exceeding the previous record drop of 2.1% set in 1987.

  • The Fed announced that it's keeping interest rates near zero and issued a statement affirming its commitment to using “its full range of tools to support the US economy in this challenging time.” Despite the bleak economic outlook, April was the best month since 1987 for US equity markets, with the S&P 500 gaining ~13%.

  • Last week’s small gains in the equities market were wiped out by Friday as investors evaluated the impact of soft earnings, weak macro data, and President Trump’s tariff threats against China. Geopolitical risks are increasing as tensions flare between the US and China over the origin of COVID-19. S&P 500 futures are down and the USD is strengthening. 

  • It was another volatile week in crypto markets with large-cap assets enjoying major price gains. Bitcoin rallied 13% on Wednesday blowing past several resistance levels and hitting a high of ~$9400. Bitcoin has since pulled back, consolidating in the $8600-$9100. Bitcoin is now up ~22% YTD, overtaking gold’s YTD gains of 12%. More vol ahead as we approach the halving in ~7 days.

1 Big Thing: The rise of Initial Uniswap Listings (“IULs”)

  • Universal Market Access (“UMA”), a decentralized financial contracts platform, listed its project token on Uniswap, a decentralized exchange.

  • Some Background: UMA is a decentralized platform enabling 2 counterparties to create financial contracts of their own design using self-enforcing smart contracts and a provably honest oracle mechanism.

  • The Token Offering: The UMA team placed 2M $UMA tokens (2% of total supply) and ~$535K ETH into a Uniswap liquidity pool, implying an initial listing price for the token of $0.26 and a fully diluted market capitalization of ~$27M for the UMA network. The token price shot up to ~$2 within 5 minutes, before falling to the $1.25-$1.35 range, where it's been ranging since. The network now has a fully diluted market capitalization market valuation of ~$62M.

  • Big Picture: The UMA IUL was the first primary offering of tokens to the public on a Decentralized Exchange in what has been dubbed an Initial Decentralized Exchange Offering (“IDO”). Is this the next iteration of the Initial Coin Offering (“ICO”) or Initial Exchange Offering (“IEO”)?

  • Some controversy: While the initial listing price offered was at the same valuation offered to seed investors 2 years ago, the dynamics of a bonding curve are such that there are strong means for price appreciation and the price cannot go below the listing price. Matteo Leibowitz from the Block sums it up:

    Matteo Leibowitz @teo_leibowitz

  • In defense of innovation: Chris Burniske, GP at Placeholder, told The Block "instead of catering to centralized exchanges or seeking illiquid and bespoke private market valuations, the UMA protocol used Uniswap for initial price discovery of its UMA token today. This attempt at novel and low-cost price discovery will allow the UMA protocol to capitalize itself from here, and we'll be interested to see how UMA progresses as new markets are added over time."

  • Reuben Bramanathan, previously legal at Coinbase, has a great tweetstorm on lessons learned:

    Reuben Brrrrramanathan @bramanathan

  • Bottom Line: While the dynamics surrounding the launch suggest there remain opportunities to improve token distribution models, IULs are likely to catch on. How will other token projects decide to follow suit?

  • Go Deeper:

What To Read

🌐 MACRO / WHY BITCOIN?

  • 🌐 Bitcoin’s Quantitative Tightening: Grayscale explores the rapidly changing and unprecedented market dynamics in the wake of COVID-19, a unique backdrop for Bitcoin’s third halving event. During the March 2020 liquidity crisis, Bitcoin was put to the test as it has been countless times since its introduction in 2009. The aggressive rebound after the deleveraging demonstrated the resiliency of Bitcoin as an investment and shed light on its potential to outperform. Bitcoin is showing signs of becoming a safe haven while maintaining an asymmetric return profile.

  • 🌐Scarcity drives value: Plan B released an update to his / her Bitcoin Stock to Flow (“S2F”) valuation model. It is defined as the ratio of the current stock of a commodity (i.e. circulating Bitcoin supply) and the flow of new production (i.e. newly mined bitcoins). Bitcoin's price has historically followed the S2F Ratio, and its recent increase back above $9000 puts it back on track to continue hitting these forecasts. As we approach the next halving, S2F predicts that we will see a more rapid increase in price, with the price increasing by an order of magnitude.

  • 🌐Argentina’s Pseudo-Dollarization: Matt Ahlborg, Data Scientist & Research Fellow at dlab.vc, published an excellent analysis exploring whether Bitcoin adoption is likely to take off in Argentina and rival adoption in Venezuela.

📈TRADING

  • 📈Bitcoin's 2-month highs have revived interest in options and derivative instruments. According to data from skew, Bitcoin futures and bitcoin options had their most active day since the March 12 crash. Currently, the futures curve is in contango (bullish) with BTC June futures basis trading with a ~1% premium. Option skew is now negative while IV increased mainly in the front end and is the highest for BTC and ETH vol term structure. Overnight funding rates increased to ~10bps (bullish). Open Interest is moving higher (bullish).

💰 FUNDING, M&A, EXITS

  • 💰a16z crypto, the crypto arm of Andreesen Horowitz, raised $515M for its second crypto fund, bringing total funds managed for crypto to ~$1B. The funds are to be deployed in native tokens of crypto networks and equity in crypto businesses. The firm is focused on investing in next-generation payments, modern store of value, DeFi, new ways for creators to monetize, and web3.

  • 💰Taurus Group, a startup providing infrastructure solutions for issuance, custody, and transfer of digital assets, to institutional clients, raised ~$11M in a Series A led by Arab Bank Switzerland, with participation from the Tezos Foundation. Funds will be used to double headcount.

  • 💰Skew, a provider of real-time data analytics for crypto derivatives, raised $5M led by London-based Octopus Ventures, with participation from Digital Currency Group, Firstminute Capital, and Seedcamp. Funds will be used to help build out its new brokerage services and launch a trade execution platform.

  • 💰Props Project, a blockchain-based distributed app network, announced it raised $2M in a token-sale led by USV and Borderless Capital, with participation from GSR, Lvna Capital, SPiCE VC, CoinFund, and the Dating.com Group. Funds will be used to scale the user network through integrations with consumer apps, and to transition its PropsChain from the current Hyperledger implementation to the Algorand blockchain.

🔓 DEFI / CEFI / OPFI

  • 🔓Oracles unsolved problems in DeFi: In the aftermath of several oracle-related attacks, Dragonfly Research released a comprehensive oracle monitoring tool that provides real-time data on all of the major on-chain oracle services.

  • 🔓Expanding collateral types on Maker: The Maker community voted to approve WBTC (wrapped Bitcoin) as a new collateral asset. WBTC will help bring greater liquidity to the Ethereum & DeFi ecosystems. WBTC can now be used in addition to ETH, BAT, and USDC to open Maker Vaults in order to generate Dai.

  • 🔓DeFi small but growing exponentially: Richard Chen, a partner at 1confirmation, estimates the current market size of DeFi is just over 150k users, but what’s more important is that there’s exponential growth in the number of users. At the current growth rate (0.56% daily), he expects to see 1M DeFi users by March 2021 and 10M by May 2022.

💸 STOs / TOKENS / DAOs

  • 💸New forms of VC investment: OpenLaw launched “The LAO,” or Limited Liability Autonomous Organization, for accredited investors looking to pool money, invest, and earn returns on the next wave of Ethereum-based projects. The LAO merges the DAO concept with an LLC-wrapper registered in Delaware.

  • 💸Stacks token sales: In July 2019, Blockstack’s offering for Stacks (STX) tokens became the first-ever SEC-qualified token offering in US history. Blockstack PBC released its first annual report with the SEC. The company brought in $23.3M last year, $23M of which came from its Reg A+ compliant token sale.

  • 💸Compound’s Governance: Compound governance approved and executed its first user-generated proposal on its governance system to support Tether. The second proposal was championed by Dharma which proposed to change the interest rate model for Dai deposits in light of the Maker DSR / SF now at 0%.

  • 💸New governance models: Gavin McDermott, Investor at IDEO CoLab, explains the rise of the SAFG, the Simple Agreement for Future Governance, an emergent framework for participatory investing, and protocol development.

💱STABLECOINS & CBDCs

  • 💱Approaching $10B in stablecoin volume: According to Larry Cermak from The Block, total stablecoin supply is now at $9.68B after growing by ~70% since February. Tether currently has 82.8% of the total supply, followed by USDC with 7.5%. Strong demand for dollars.

  • 💱The Digital Dollar: In his new role as Co-Founder of the Digital Dollar Project, a partnership between Accenture and the Digital Dollar Foundation to advance exploration of a US Central Bank Digital Currency, Chris Giancarlo, former Chairman of the CFTC, envisions the creation of a digital dollar as a mission-critical move for the US that will provide benefits around the globe.

  • 💱Libra: A Concentrate of 'Blockchain Antitrust': Thibault Schrepel, a Faculty Associate at Harvard University's Berkman Klein Center for Internet & Society, analyzes the type of governance that Libra is aiming for, as it indicates the nature and frequency of certain anti-competitive risks. He offers an assessment of the anti-competitive collusion and monopolization that Libra governance might yield and assesses the desirability of the adversarial approach adopted by antitrust agencies and governments thus far.

🌉 INFRASTRUCTURE

  • 🌉Nasdaq partners with R3 to help institutions build digital asset marketplaces: Nasdaq’s Market Technology announced it will apply R3’s enterprise blockchain software alongside matching, data broadcasting, surveillance and post-trade software tools designed to manage the complete asset lifecycle for new and existing market infrastructure operators.

  • 🌉FTX’s global expansion: FTX, a crypto derivatives exchange that has mainly served the Asia market, launched a beta spot exchange in the U.S. According to the FTX.US website, the new exchange has registered as a MSB with FinCEN.

  • 🌉Exchange diversification: Binance announced the launch of Binance Pool, its crypto-mining service. Binance Pool will support both PoW and PoS mechanisms for mining. The platform is first launching with a bitcoin mining service, with support for more crypto to come.

  • 🌉Genesis’ best quarter ever: Genesis Capital, an institutional digital asset lending platform, released its quarterly insights. The firm added $2B in new originations, doubling the previous record of $1B set last quarter, and up 354% from the same quarter last year. Active Loans Outstanding touched $1B in mid-February before settling to $649M at the end of the quarter. Active Loans were up ~20% QoQ despite a 50% intraday drawdown in the price of BTC in mid-March.

🍰LAYER 1

  • 🍰Token Distribution: Adam Cochran, a partner at MetaCartel, analyzes the top 10,000 Ethereum addresses to learn about liquidity, profitability, market manipulation, and what Whales are doing with their money. The analysis shows that Ethereum token distribution with the top 10,000 addresses representing 57% of all ETH is comparable to Bitcoin’s top 10,000 holders, who hold 57% of supply.

🍰🍰LAYER 2

  • 🍰🍰Keep’s Road to Mainnet: Matt Luongo, the CEO of Thesis, the parent company behind the Keep Network, announced the launch of Keep’s token and staking contracts. Today, the team rolls out the random beacon, also unlocking the ability to start earning KEEP staking rewards.

⚖️LEGAL

  • ⚖️Telegram delays: Telegram postponed the launch of its TON blockchain (again) to April 2021 after a judge ruled that the company could not launch its blockchain or issue Gram tokens until its case with the SEC was resolved. This delay triggers a clawback clause in which Telegram will offer to return up to 72% of each investor's stake from its initial $1.7B token sale. Investors can loan their capital in exchange for a higher equity stake. 

📹 VIDEO OF THE WEEK

  • 📹Special shoutout to @hsinjuchuang, CEO of @DystopiaLabs, for virtually mobilizing a whole industry and organizing 117 sessions for the DeFi Discussions Summit. The speaker lineup was fire and I learned so much about the future of finance. All recordings are available online for free.

Upcoming Virtual Events / Conferences

🎓Highlighted Industry Jobs (non-exhaustive list for NY)

Fabric Ventures - Web 3.0 talent form:

  • If you are affected by lay-offs due to Covid-19, or if you are in between jobs, please share your details here, and Fabric Ventures will do its best to share this information with companies in Web 3.0 / crypto that are well funded and open to remote work.

Open Roles:

Nothing written in RelayNode NYC is legal or investment advice and should not be taken as such. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.

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David Gogel https://www.definancier.com
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