$1B Cash Cushion

Ethereum ETF Mid-October | L1 Digital $152M Fund

Marco Manoppo & Karon Pangestu
August 11, 2023

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Good Morning,

Lots of individual projects’ developments this week (UnibotX, Mantle, Rollbit), but the most important upcoming news is ETF related.

ARKInvest-21Shares Bitcoin ETF deadline is tomorrow, many expecting a delay. The outlook for Ethereum ETF is looking good, with BBG analysts predicting it will hit the market mid-October.

In the past the SEC has told Ether Futures ETF filers to withdraw 5-6 days after the first filing hit. We are now on Day 13 and no withdrawals. Not home free yet but very good sign. As we predicted these will likely hit market in mid-October.
— Eric Balchunas (@EricBalchunas)
9:07 PM • Aug 10, 2023

In Today's Email:

What Matters: Circle $1B cash cushion 🛋️
Founders-Investors Highlight: Frank of DeGods and y00ts 📷
Deal Flows: L1 Digital $152M Crypto Fund II 📈

Narratives: Mantle is planning a massive move with liquid staking, allocating up to 200,000 ETH (yes, that’s in ETH, not $200,000).

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WHAT MATTERS

Circle’s $1B Cash Cushion

Image: CoinCulture

State of play: Circle has stated that the company has a $1B cash reserve to navigate the challenges of USDC declining market share and new competition from other stablecoins.

USDC in circulation has fallen from $45B to around $26B (43% decrease) since the beginning of 2023.
USDT, the largest stablecoin, has experienced growth over the same timeframe.

The drop is partly due to:

A decision by Binance, the world's largest crypto exchange, to decrease its use of USDC in favor of BUSD.
Circle’s $3.3B exposure to Silicon Valley Bank, which collapsed, and briefly disrupted the peg of USDC.

In the first half of the year, Circle recorded $779M in revenue, surpassing the $772M revenue for the entire 2022. EBITDA reached $219M in the same period, outpacing last year's $150M.

Why it matters: Circle is facing intense competition from Tether (and now PayPal, as well as fighting regulatory scrutinies. The $1B is critical for the firm to compete in the next few years.

For builders and investors: A truly decentralized stablecoin is one of the few DeFi primitives that hasn’t been solved. Lots of opportunities here, but extremely challenging to get right.

I’ve felt the same way
The only real battles left to fight are
1) a scalable, decentralized, perfect peg stablecoin
2) faster txn/sec without sacrificing decentralization or uptime (tbd if that’s via layers or a fast monolithic L1)
3) Idiot-proof self-custody wallets
We really… twitter.com/i/web/status/1…
— Tyler Reynolds (@tbr90)
12:43 AM • Aug 10, 2023

BUILDER-INVESTOR HIGHLIGHT

Frank DeGods (Rohun Vora), Founder of DeGods and y00ts

The Crypto Times

Frank DeGods is the pseudonym of Rohun Vora, the founder of two of the top NFT projects on Solana: DeGods and y00ts.

The pseudonym “Frank” drew inspiration from the artist Frank Ocean.
Frank doxed himself in November 2022 with a tweet of a screenshot from his personal Instagram account, revealing his real identity.

Previous backgrounds: Rohun studied cinematography and film production at UCLA. He did not finish his study to pursue his entrepreneurial dreams.

Rohun’s early business was Duffl, a repurposed hacked Bird e-scooters for grocery delivery joined Y Combinator and raised $1.3M.
Rohun then took on a marketing role at MainStreet, a software development company that has been valued at $500M.

The big idea: His NFT projects, notably DeGods and y00ts, are Solana’s stop profile picture NFT collection. The team plans to turn both collections into blue chip NFTs.

DeGods also launched DUST utility token that allow NFT owners to obtain newer versions of their NFT as well as other future benefits.
Rohun received a $3M grant to move y00ts from Solana to Polygon. After 9 months, y00ts backed off on the grant and decided to migrate to Ethereum instead.

1. y00ts will be migrating to Ethereum.
— y00ts (@y00tsNFT)
10:32 PM • Aug 9, 2023

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Bakkt's Revenue Surges to $348M

Bakkt

The institutional only exchange reported $348M in Q2 2023 revenue. This growth happens during the bear market even as trading volume is down thanks to Bakkt’s acquisition of Apex Crypto.

Bakkt reported a 51% decline in traded volume to $531M.
Baakt’s number of active accounts decreased by 20% in the past year.
Baakt’s assets under custody increased 3% to $660M,
Bakkt posted a net loss of $50.5M, up from the $27.6M loss in the same quarter last year.
Bakkt has ~$100M in cash left and Bakkt is projected to burn about $90M+ in cash for FY 2023.

Bakkt is betting on its own soft landing.
Bakkt has ~$100 MM in cash left.
Bakkt is projected to burn about $90 MM+ in cash for FY 2023.
There's a chance ICE, largest owner, is forced to acquire Bakkt.
A round-trip trade that's would be a net positive for ICE.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia)
7:48 PM • Aug 10, 2023

DEAL FLOWS

L1 Digital $152M Crypto Fund II

Source: CoinDesk

Deal flows remained steady this week 🤝 — we saw $200M+ in deals.

L1 Digital, a Zurich-based investment advisor with $400M+ in AUM has raised $152M for its second crypto VC fund.

L1 Digital is registered with FINMA, Switzerland’s independent financial markets regulators.
The new fund will allocate 70% into crypto startups and 30% into early-stage crypto funds.
The average check size is between $1.5M to $7M per project.
L1 Digital has deployed 1/3rd of its new crypto VC fund.
L1 Digital has done a fund of funds models before, backing firms such as Multicoin, DeFiance, Castle Island Ventures, and 1kx.

Deal flows in the past week:

Goldlink, $1.4M Pre-Seed Round
D8X, $1.5M Pre-Seed Round
vip3, $2M Seed Round
unshETH, $3.3M Seed Round
fxhash, $5M Seed Round
Puffer, $5M Seed Round
Xverse, $5M Seed Round
Cantina, $7M Seed Round
SphereX, $8M Seed Round
Cube3.ai, $8.2M Seed Round
Curve, $5M Private Round by Binance Labs
AltLayer, Undisclosed $ Private Round
KiloEx, Undisclosed $ Private Round
Kinza Finance, Undisclosed $ Private Round
Rocket Pool, Undisclosed $ Private Token Sale to Coinbase
L1 Digital, $152M Crypto VC Fund II

QUICK BITES

Gemini adds XRP.
SEC seeks to appeal ruling XRP ruling.
Coinbase officially launches Base Blockchain.
Argentina investigates Worldcoin over data privacy.
Circle has $1B in cash cushion.
Bittrex settles with the SEC for $24M.
FTX management fires back at creditors.
Aragon considers selling itself.
DCG asks court to dismiss Gemini's 'PR campaign wrapped in lawsuit.'
PayPal stablecoin draws harsh rebuke from Maxine Waters.
NGO calls on SEC to reject Spot Bitcoin ETF applications.

MEME & NOTEWORTHY READS

Decentralised’s read on staking.
Ann’s read on trendy defi narratives.
a16z crypto’s read on Lasso and Jolt, a new approach to SNARK design.

2021 vs 2023
— intern (@intern)
6:13 AM • Aug 8, 2023

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