BlackRock Ethereum ETF Plan

Faction $285M Fund | Solana Profitability Math

Marco Manoppo & Karon Pangestu
November 10, 2023

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Happy Friday. BlackRock revealed its plan for a spot Ethereum ETF. In the past week, we’ve also seen announcements from multiple new funds, amounting to almost $500M, which will be invested into crypto startups.

Dare I say… we’re so back.

In Today's Email:

What Matters: BlackRock Ethereum ETF 🪨
Founders Highlight: Armani of Backpack 🎒
Deal Flows: Faction $285M fund 💰

Narratives: Numbers go up. Enjoy the pump and make sure to keep a cool head!

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WHAT MATTERS

BlackRock Files for Ethereum ETF

James Seyffart

State of play: BlackRock revealed its plan for Ethereum ETF via a filing by Nasdaq, the US exchange where BlackRock will seek to list the product.

The "iShares Ethereum Trust" entity, part of BlackRock's ETF division, was recently registered in Delaware.
The filing indicates Coinbase as the custodian, while an unnamed party will hold the cash.
BlackRock already has the key for ETF approval: a market-surveillance pact with Coinbase.

According to James Seyffart, there are 5 other spot ETH fillings by:

VanEck
ARK + 21Shares
Hashdex
Invesco + Galaxy
Grayscale.

The iShares Ethereum Trust has just been registered in Delaware.
For context, BlackRock's iShares Bitcoin Trust was registered in a similar manner 7 days before they filed the ETF application with the SEC. Details below.
[announcement: I’m moving to @SynopticCom soon]
— Summers (@SummersThings)
3:00 PM • Nov 9, 2023

Why it matters: BlackRock is doubling down on crypto. ETH price jumped ~11% hours after the news of the filling broke out.

For builders and investors: More spot-based regulated products and more stamp of approval from BlackRock is a net positive as it will entice more capital to come into the crypto markets.

BUILDER-INVESTOR HIGHLIGHT

Armani Ferrante, Founder of Backpack

Fortune Crypto

Armani Ferrante is the Founder and CEO of Backpack, a next-gen cryptocurrency exchange and multi-chain wallet. He is also the founder of Mad Lads NFT and Anchor.

Backpack is launching a cryptocurrency exchange after securing a key license from the Dubai Virtual Assets Regulatory Authority.

Previous backgrounds: Armani was a software engineer for Alameda Research and founded Coral, which raised $20M in a round co-led by FTX. Coral lost $14.5M which was stuck on FTX after the exchange collapsed.

Armani studied CS at UC Berkeley and started his career as a SWE at Apple in 2016.
He went full-time crypto in 2018 as a SWE for a Counterfactual, an open-source project building state channels on Ethereum.
In the same year, he moved to Oasis Labs as a SWE, a cloud computing platform on blockchain.

The big idea: Ferrante is starting his own exchange, motivated partly by FTX's collapse.

He stated, "We need to end opaque crypto exchanges lacking transparency, proof of reserves, and auditability, which contradict industry standards."

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

The Math Behind Solana’s Profitability

Solana Compass

@mhonkasalo is breaking down the math behind Solana's profitability and financials in his latest Substack post.

He argues that Solana needs a ~40x increase in transactions at today’s fee levels to break even.

He argues that Solana is not yet profitable, which also happened to Ethereum in its early days.
With a supply of 562,119,561 SOL and 5.7% inflation, Solana faces a yearly inflation cost of $1.44B.
With annual revenue of $36.5M, it incurs a net loss of $1.4B.
Solana needs to increase transactions by about 40x to break even.
Solana can make $20+ billion in profit per year if Firedancer pushes Solana’s TPS to 100K+ (with half of the block space getting filled and it added priority fees).

DEAL FLOWS

Faction $285M Early-Stage Crypto Fund

Faction

Deal flows soared this week 📈 — we saw $330M+ in deals.

Lightspeed Ventures announced the launch of Lightspeed Faction Fund I, a $285M early-stage venture fund dedicated to crypto startups.

Faction invests in Seed and Series A rounds, across both equity and tokens.
Faction is vertical agnostic and invests across the stack (infra to apps) and sectors.
Faction’s average check size ranges between $5M and $10M.

In other news: Amsterdam-based Maven 11 aims to raise $100M for its third crypto fund by next year's first half, with a third already committed by LPs.

Deal flows in the past week:

Due, $3.2M Seed Round
Stablr, $3.5M Seed Round
Authentik, $4M Seed Round
Definitive, $4.1M Seed Round
Pimlico, $4.2M Seed Round
Stackr, $5.5M Seed Round
Llama, $6M Seed Round
Intmax, Undisclosed $ Strategic Round
Layer N, Undisclosed $ Strategic Round
Ritual, $25M Unknown Round

QUICK BITES

Binance announces a new self-custody wallet.
BlackRock seeks Ethereum ETF in Nasdaq filing.
Near and Polygon collaborate to build ZK solution.
UBS allows wealth clients to trade crypto ETFs in HK.
JPMorgan adds programmable payments to JPM Coin.
FTT token jumps 84% following FTX revival comments.
Standard Chartered to invest $100M in crypto startups.
Polygon Labs starts $85 grant program to draw builders.
SEC said to open talks with Grayscale on spot Bitcoin ETF.
Lightspeed Faction starts $285M fund for crypto startups.
Wintermute published a thread about Near USN stablecoin.
Celsius emerges from bankruptcy with repayment plan approved.

NOTEWORTHY READS

Paul Veradittakit’s read on NFTfi.
Bitwise’s read on its searcher builder dashboard.
Li Jin’s read on love vs fame: a framework for social applications.

“oK bUt WhY dOeS iT nEdD tO bE oN a BlOcKcHaIn?”
Oh I’m sorry, do you know of a better place to monetize ideas that are this terrible?
— Gwart (@GwartyGwart)
11:23 AM • Nov 9, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.