Five bullet Friday - Issue #56

Dear Partners,

Today is another happy day as I have processed August month dividends to all the partners yesterday. All of you who are not reinvesting dividends, should receive dividends in your bank account today. If you have not received the dividends, please let me know. This month I have set up the wire transfers from our new bank, Silvergate Bank which does not charge us any money for wire transfers, unlike Chase bank who wants to collect $45 for a wire.

1. I read our financial news coming from Wall street sometimes to amuse myself. I have heard that Warren Buffett's Berkshire Hathaway is investing in a cloud-based analytical platform company called Snowflake ( ticker: SNOW). Wall Street loves this company and apparently many investors are singing praises of Snowflake. It has a market cap of $67 Billion. It is selling at a multiple of 135 times EV/Sales ratio on the first day of trading. They had $264 million revenue and -$348 Million of net income loss. They have been issuing enormous numbers of stock options to the executives and diluting the share count steadily. I think it is overvalued, but Wall Street wants us to believe that this is a value investment. 

2. Let us contrast this with our YFI investment. After the recent dip, I have added more to our YFI position and we currently hold 480 tokens. It earns close to $8 per day per each YFI token in staking rewards. It earns us close to $250,000 per day in protocol fees, making their annual earnings $91.25 millions in real dollars, not the so-called  "net income". It has a market cap of $1 billion today, giving it a P/E ratio of 10. Currently around $670 million is locked in their smart contract, giving  it a price-to-sales ratio of 1.49. Now compare this to Snowflake's 253 times P/S ratio (calculation: 67000/264) and negative P/E ratio. I sleep well at night knowing that we are buying something cheap by any measure of valuation.

3. We continue to add to our position in NXM tokens last week. We are currently staking our NXM tokens and receiving SAFE tokens as staking income. We have collected substantial income from staking our NXM tokens in the process. Insurance business will grow steadily as there is an enormous demand for insurance, from failures in the smart contracts.

4.  We are actively engaging in proof-of-stake mining with Synthetix. We hold 661,437 tokens of SNX which are staked in a smart contract. Unfortunately this is the first time since April that our collateralization ratio has fallen below 600%. Today it is at 460%. As a result of this we are unable to get any income from the protocol this week. This happened due to the fact that the price of SNX went from $7.50 to $4.50. This caused our debt to increase but the asset value has dropped significantly. This problem corrects itself if the price of SNX goes up. If it does not, I will be forced to buy new SNX tokens to restore our collateralization peg. We will receive income from the protocol only if we maintain our ratio above 600%. So no income this week from SNX.

 
5. We are generating good income from our dark nodes running for REN protocol on the cloud platform of Digital Ocean. This week we collected $1734.46 ( per node $247.78) in new tokens as our toll-booth fees. The full report can be seen here:https://docs.google.com/spreadsheets/d/1QU47tR4eK0fD2ySaP88LM9U46vD7p6mt80KSfqu00DI/edit#gid=982608609. REN protocol had close to zero transaction volume on June 1st. Today it is close to $777 million. I am impressed with their growth and it still has a long way to go. So far there are exactly 1197 such dark nodes collecting transaction fees.

Have a wonderful weekend!