RCIF II - Five bullet Friday - Issue # 4

   Those investors who joined in the month of January will be receiving statements from Intertrust group today. These statements currently do not show an Inception-to-date column, but we are working to fix it by February. 

1. I have been bearish on the stock market for almost 5 months now. I still see stocks climbing recklessly with terrible fundamentals. For example, Nikola Motors has a market cap of $7 billion and Wall Street analysts love this stock. I talked about it last year when it was trading at $60. It has $0 revenue and $147 million loss. The total number of shares outstanding went up by 44% in one year. They constantly dilute existing shareholders with new equity issued. 

2. Let us contrast this to the KLON token. The total number of tokens outstanding is close to 85000. We own 9794.3945 tokens as of today. We started acquiring KLON tokens around $10 on February 1st. We owned 0 tokens in January. Right now it is trading at $348. I roughly calculate our cost basis around $20. In the last week we have received a staking income of $116,518 in one week. Please check the Retained Earnings spreadsheet. We received this income in the form of 3.6558 KBTC tokens. A protocol with a market cap of $20 million is able to generate substantial cash-flows in comparison to Nikola at $8 billion in market cap.

3. I realize that KLON has a very small market cap(Less than $2 million when we started) right now. You may wonder why risk capital on such a small protocol. First time, when I looked at the size of the stabilization fund of KLON, my first reaction  was "Holy cow!".  Here is the contract address holding $4 million today: https://etherscan.io/tokenholdings?a=0xd4997a502dc06314afa17e03542f96198f7d36e5. The total number of KBTC in circulation today is 100. The price of KBTC today is nearly $55,000. The total market cap of KBTC is barely $5.5 million. This war chest of stabilization fund can only grow with time, as long it is not depleted with negative rebases. This stabilization fund already holds 75% of the market cap with none of it being used and growing steadily. KBTC price has been consistently above bitcoin's price which is helping us to generate staking income. 

4. The genius of KLON token lies in the size of the stabilization fund. DIGG token does not have this ability to buy tokens when DIGG price goes below bitcoin. The protocol expects people to naturally buy it when it is trading at a discount and shrinks the supply. That is not efficient. KLON provides a bazooka ( a.k.a Stabilization fund) that will automatically kick-in if the price ever drops below bitcoin. The market understands the power of this fund, and reflexively it pushes the price of KBTC to continuously stay above bitcoin's price. I think it is very likely that KBTC wil hit $100,000 price well before bitcoin hits that number. If this continues for a year, I can see this stabilization fund continuously grow their stash of bitcoins into hundreds of millions. All the traders see the bazooka and its implications, therefore, we never have to pull it out. That is why I did buy anything else this month other than KLON. Please note that this position is currently not reflected in the Zapper portfolio.

5. Our Badger position is doing well. The team is delivering on the promise of connecting bitcoin holders to the decentralized finance markets. I believe that DeFI protocols like Badger, YFI and KLON are proving that this is the beginning of the end of Wall Street's dominance on financial markets. 

I request all of you to whitelist my address, '[email protected]'. Google's weird algorithm sends my emails to the spam folder.

Have a wonderful weekend!

Sam Ikkurty

Managing Partner