RCIF II - Five bullet Friday - issue #61

Dear Partners,

   Crypto markets went through a major blackswan event last week. This was caused by the destruction of Terra stablecoin and Luna tokens. Our fund has zero exposure to these two tokens and avoided this blackswan.

1. When stock markets dropped due to Lehman Brothers, its marketcap was $60 billion. LUNA had a market cap of $50 billion and it was attached to the $30 billion value locked in UST token. Since people take a lot of leverage in Crypto, that amount of money lost from various VC funds and retail investors is close to $200 billion. It was surreal to watch how quickly liquidity exited the market.

2. I looked at LUNA token several times to add to our portfolio, and decided to skip. Majority of VC funds in Crypto markets hold both LUNA and UST and have taken a major hit. It is because of the circular dependency between LUNA and UST tokens. LUNA is valuable as long as UST holds a peg. If UST loses peg, it will make LUNA weaker. When LUNA becomes weaker, it makes the UST lose its peg even more. This leads to a death spiral. This reasoning helped us avoid a major negative event.

3. OHM has implemented the inverse bonds. This enables protocol to buy back the OHM tokens from the market at a discount to market price. So far, OHM has burnt 370,856 OHM tokens in a matter of 2 days. This will slowly reduce supply and increase our percentage ownership of the coins. Currently in our Portfolio, we own 536,289 tokens of OHM. On a weekly basis, we are earning 17,883 new OHM tokens ( or $ 263,036 at current market price) as our rebase reward. OHM is holding up better than bitcoin or Ethereum.

4. KLIMA is busy signing up major partners to the launch of KLIMA infinity program that allows institutions to offset their carbon emissions. Since the launch, they have burnt 100,000 base carbon tons (BCT), which is a major achievement for a 6 month old protocol. Currently in our Portfolio, we own 66,965 KLIMA tokens. On a weekly basis, we are earning 2,814 KLIMA ( or $22,512) tokens via rebase rewards.

5. This week we added Babylon Finance to our portfolio at a price of $30 per token. Babylon is a decentralized asset management platform. It has a maximum supply of 1 million tokens. We have bought the tokens and staked them in order to generate income in the form of new BABL tokens. Over the long term, I expect all assets (stocks, bonds, commodities) to trade digitally. It is our chance to enter this gigantic market with a small market cap of Babylon finance.

Have a wonderful weekend!

Sam Ikkurty