Five bullet Friday - Issue #76

   Last week, Crypto markets were surprised by the action taken by Indian regulators. Indian government proposed a ban on 'private' crypto currencies and wanted to introduce their own central bank currency.

1. I think many Central Banks will issue their own digital currencies over the next few years. But they are going to be inflated away just like their non-digital versions. I think, emergence of these currencies will enable faster adoption of crypto assets. I will not call them a cryptocurrency at all because they are neither censorship-resistant, nor permissionless nor decentralized. So comparing bitcoin to these central banks issued digital currencies like comparing a baby to a life-sized doll. They both may look alike, but they are vastly different. One is a doll and other is a complex, evolving , adaptable, anti-fragile system that cannot be controlled by political parties. I recommend reading this article from Balaji Srinivasan.

2. Last week I established a new position in KLON token. Most of our tokens were purchased between $10 to $20. We currently own 6394 tokens out of a current supply of 65,000 tokens. So we own close to 10% of the supply currently. It is very illiquid and it is going to be extremely volatile for the next few months. Klondike Finance allows any user to create synthetic assets that automatically track the price of other real-world or crypto assets. Their first product is KBTC which is synthetic bitcoin.

3. This protocol is a competitor to Synthetix. Synthetix enables users to buy synthetic assets that are backed by the collateral of SNX. Klondike finance achieves this algorithmically by tracking the price of an asset where the supply shrinks and expands to bring the price in line. If you are interested to understand more, you can read this article about their product road map. Just in one day, we received 0.1182 KBTC as our staking reward. This is only the first of many other tokens that will be introduced. I see KLON as a golden goose that lays eggs in the form of bitcoins and eth. 

4. Synthetix seems to be gaining ground in terms of fees it generated. This week we have generated a staking income ( 4452.28 SUSD + 3719.99SNX * $21.54  )  totaling $84,580. The value of the staked SNX  (640748) is $13,801,727 at a price of $21.54.  This gives us a yield of 84580/ 13,801727, which is 0.6128% per week. If we annualize the yield by (1.006198)^52,  it results in a yield of 37.39% APY.  This can be seen directly from this website here:https://docs.google.com/spreadsheets/d/1QU47tR4eK0fD2ySaP88LM9U46vD7p6mt80KSfqu00DI/edit#gid=366963260  on the SNX tab. We currently hold 735,718 tokens of Synthetix.  

5. One week ago, DIGG price dropped to $20,856. At the same time on January 31st, bitcoin price was at $32,400. It was literally selling at a 35% discount to bitcoin price. It defies common sense, but algorithmic coins take time to reach stability in price which can take upto 6 months. Ignore the price but always look at the marketcap to understand the growth of our DIGG tokens. DIGG marketcap started at $20 million on January 24th. For example, over a 12 month period (December 2019 to December 2020), Ampleforth’s price largely hovered around $1.00, as shown in the image below. ( During the same period, Ampleforth’s market capitalization grew roughly by 27,000% ($ 1.35 M to $ 367.11 M).

It is going to be very interesting to see how it plays out with DIGG.

Have a wonderful weekend!

Sam Ikkurty

Managing Partner