Five bullet Friday - issue #103

    Crypto market sentiment improved heavily with bitcoin price bouncing back. All of you should have received your distributions for the month of July, this week. Our investment objective in the short-term is to grow the number of tokens we own to produce income (NOT their market value in dollars) and in the long-term generate capital gains in terms of value in dollars. So during the downturns our token counts keep going up, even if our market value as measured in dollars is going down. This can be seen from our Retained Earnings spreadsheet.

1. This week is an important moment in the history of our fund. So far, I have focused mostly on ERC-20 tokens and Decentralized Finance. Starting from this week, I am venturing out into Non-fungible tokens (NFT). So our fund will not only own fungible tokens like OHM, YFI, YGG etc, but also one-of-a-kind investments. I am truly inspired by the Axie Infinity game and its real-world impacts. If you want to get a primer on NFTs, please go through this article from Chris Dixon from Andreessen Horowitz.

2. Our first NFT purchase is called YGG founder's coin. These were issued around January of this year to the first 300 users of YGG. Only 290 of these tokens were claimed. Therefore, the supply is permanently capped to 290. This enables us to get numerous airdrops from Yield guild. They first started trading at 0.5 ETH in February 2021. We purchased at 8.7 ETH as our cost-basis. I intend to hold them forever.  You see them currently in Zapper portfolio.

3. US Senators disappointed all of us again. Senator Shelby has objected to the amendment to remove draconian reporting regulations on miners, stakers and developers. If Crypto market is like automobiles, fiat world is the equivalent of horse-drawn carriages. What the government wants all of us to do via this "infrastructure bill" is to pull these automobiles with horses. Imagine sitting in a Tesla car and pulled by a horse. This 87-year old dinosaur senator does not understand that the point of an automobile is to work without a horse. The point of blockchain is to separate money from Nation states, reliance on trusted third-parties to bring permissionless, global networks guided purely by mathematics. It appears that Janet Yellen is pushing for this amendment. It is important to understand that Janet Yellen got paid $7.2 million in speaking fees from wall street (just zoom calls), while receiving only $200K in salary from the US Government. See below from her disclosure reports. It is easy to understand why they would back horse-drawn carriages over automobiles.

4. I am amazed at the growth of Axie Infinity. Before blockchain games, we are used to the world of centralized games like Fortnite, World of Warcraft etc, where all of the player's attention will accrue to the Game development company upto 100%. In that business mode, it is free for players to join but have to pay to buy in-game items. This is normal for all games sold in Google play store and Apple App store. Axie Infinity only takes 4.25% tax on player's earnings while the rest goes to the player. It is remarkable that even with such a tiny tax-rate, it managed to generate a revenue of $200 million in the month of July alone. This is more than what bitcoin and ethereum networks paid to their miners combined!

5. This week Yield Guild Games released the balance sheet for their DAO. The total value of the treasury as of the end of July stood at US$415,953,050. As an analogy, we can understand YGG as the provider of cars to the poor, but skillful drivers for a share of their income. In our case, our drivers are gamers driving Axies, instead of people driving taxis. These Axies are capital intensive and their prices are rising. In January you could buy each Axie for $20, but today they cost $600. Recently one particular Axie was sold for $318,000.  As part of our fund, we provide capital to the skillful gamers who are cash-poor but time-rich. All of you should collectively feel good about this investment, because we are helping 1 million users to make a healthy living in the Metaverse and lifting people out of poverty. We are not giving them cars to drive but NFTs to drive in the metaverse.

Ravi Avadhanam and I are going to be in Atlanta this weekend. We are attending a conference of physicians of Indian Origin. If any of you are in Atlanta and like to meet us during the weekend, please email us.

Have a wonderful weekend!

Your humble digital farmer,

Sam Ikkurty