3AC: $1.16 Billion Est. Recovery

Drift Labs $100M TVL | Liquid Restaking Token

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Good Morning. Memecoin mania continues, but it seems to be slowing down. SOL almost hit $100. ETH hate rally seems to be starting after the chain received a lot of hate in the past few weeks for its expensive tx fees.

In Today's Email:

  • What Matters: 3AC 46% recovery rate ❤️‍🩹

  • Founders Highlight: Cindy of Drift Labs 📈

  • Deal Flows: Rio Network’s seed round 💰

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Narratives: Prepare for capital rotation to LST and the ETH L2 ecosystem. Arbitrum is pumping and Metis announced a $133m ecosystem fund.

WHAT MATTERS

3AC Liquidators Estimate 46% Recovery

State of play: The joint liquidators of 3AC, Teneo’s Russell Crumpler and Christopher Farmer, estimate that creditors will receive 45.74% of their claims, Initial distributions are scheduled for the first quarter of 2024.

  • As of December 18, 3AC's assets were estimated at $1.16B, in contrast to claims amounting to $2.7B.

  • Teneo settled lawsuits with DCG, Genesis, and BlockFi, increasing 3AC's reported assets by about $292M.

  • The report indicates that 154 claims totaling $3.4B were filed against 3AC, with $200M not admitted for distribution and $322M likely to be rejected. Additionally, $76M worth of claims are currently disputed.

  • Most assets held by the liquidators are illiquid tokens (82%) with vesting periods, with only 6% being liquid.

  • The illiquid portfolio includes 13 tokens worth $563M, with about $50M unlocking each quarter until 2026.

  • The liquidators have sold $34.5M in liquid tokens and $15M in NFTs, totaling $66M in realized asset sales.

  • The portfolio also includes 6.9% in equity and investments and 4.8% in cash.

Teneo also reported that a British Virgin Islands court froze up to $1.1B in assets of 3AC co-founders Su Zhu, Kyle Davies, and Davies' wife Kelly Chen.

  • The BVI court made the order on Dec. 18 to prevent Zhu, Davies, and Davies’ wife Kelly Chen from dealing with their assets worldwide.

  • A Singapore court also granted a domestic freezing order on Wednesday.

  • Teneo reports that a freezing order was sought against the 3AC founders for allegedly causing the company's decline, equal to the value of the frozen assets.

Why it matters: The faster we see the conclusions of the 2022 crypto bankruptcies, the better it is for the industry.

For builders and investors: As the overhang from 2022 crypto bankruptcies come to an end, the sentiment and price dynamics will finally be able to enter a new cycle.

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BUILDER-INVESTOR HIGHLIGHT

Cindy Leow of Drift Labs

Cindy Leow is the co-founder of Drift Labs, the core contributor to Drift Protocol, a perpetual DEX on Solana with $100M TVL.

Previous backgrounds: Before Drift, Cindy was an Investment Researcher at Softbank Korea, focusing on AI, IoT, and medical investments in China, and served as a Portfolio Manager at 256 Capital from 2019 to 2021.

  • Cindy also worked shortly at Middle East Entrepreneurs of Tomorrow and Ideate Investments.

  • Cindy earned her Bachelor’s Degree in Strategic Finance and Data Science from Minerva University.

  • She also served as the Executive Director of 24 Hour Race from 2015 to 2016, the largest international youth-led movement to fight human trafficking and modern slavery.

The big idea: Drift Protocol aims to make the onchain trading experience so seamless, with the ultimate goal of having the large majority of crypto transactions happening onchain instead of in centralized exchanges.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

Messari’s Crypto Theses 2024

Credits to CoinExpress for the original tweet.

CoinExpress tweeted a summary of the Crypto Theses 2024 by Messari, here are the key takeaways from the summary:

  • Messari labels bitcoin as "Digital Gold" and predicts its dominance could hit 60% by 2024, influenced by ETF trends and macro tensions.

  • ETH is held by Messari more for defense rather than performance expectations compared to Bitcoin or other L1s.

  • Experts note ETH's lagging performance: BTC is up ~150% and SOL over 650% this year, while ETH has risen just above 80%.

  • Bullish on SOL, especially for its ecosystem advancements like Firedancer to enhance Solana's performance and address its "power outage" issue.

  • Messari compares AI to mobile tech and crypto to the Internet, suggesting that AI advancements will boost demand for crypto.

  • Messari anticipates trends like DePIN, DeSoc, and DeSci in 2024, with a focus on DeSoc (e.g., Farcaster, Friendtech, Lens Protocol) potentially mirroring the 2020 DeFi Summer craze.

  • Messari is shifting its bets to AI, DePIN, DeSoc, and DeSci.

DEAL FLOWS

Rio Network Seed Round

Deal flows remained strong this week 📈 — we saw $130M+ in deals.

Rio Development Inc., the initial team supporting the development of the Rio Network, secured a seed round led by Polychain Capital, Blockchain Capital, and Breyer Capital, with over 50 investors participating.

  • The amount raised is undisclosed.

  • Rio Network is a network for issuing Liquid Restaking Tokens.

  • Essentially, Rio plans to further maximize capital efficiency by providing the liquid version of restaking tokens made popular by EigenLayer.

Deal flows in the past week:

QUICK BITES

  • Prometheum receives FINRA approval.

  • Coinbase obtains France crypto approval.

  • IOSCO issues DeFi policy recommendations.

  • Argentina says crypto can be used in contracts.

  • Circle obtains conditional registration in France.

  • Bitfinex Securities announces first tokenized bond.

  • USV-Variant released a crypto compensation survey.

  • Cathie Wood’s ARK dumps $245M in Coinbase, GBTC.

  • South Korea's Financial Regulations to meet SEC Gensler.

  • Ledger to change TX signing process after exploit; will return funds.

NOTEWORTHY READS

  • Ordinalfriends’s read on BRC-20 guide.

  • Delphi Digital’s read on the year ahead for infrastructure 2024.

  • OP Labs’ read on the endgame for decentralization in the OP ecosystem.

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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.