Making Sense of MCaps and FDVs

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Good Morning.

Today’s issue might be a tad bit shorter as I’m running around Brussels while trying not to get robbed. Anyway, let’s get to it.

In Today's Email:

• What Matters: Ethereum L2 Deposits Hits Yearly Low 📉

• Case Study: How to Make Sense of Mcaps and FDVs ✍️

• Governance & Features: Jupiter’s Ape Vault 🙈

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WHAT MATTERS

Ethereum Layer 2 Rollups Deposits Hits Yearly Low

State of play: The number of unique depositors into Ethereum Layer 2 rollups hit a yearly low this week at 34,920 users.

• Unique depositors to ETH L2s last week was ~52000

• Unique depositors to ETH L2s on April was ~250,000

• Total combined TVL in all optimistic and ZK rollups is currently around $20 billion

What’s next: With the surge of rollups launching in the market, we will soon see what the impact of this is on the market. 

Why it matters: New rollups will need to differentiate themselves to attract builders and users.

• What will they do if they don’t have any technical/commercial edges, and their incentives run out?

Our take: Popular apps that becomes an L2 will be in a better position than L2s that start as a chain.

For builders and investors: Pay attention to how these L2s and rollups try and differentiate themselves, especially after airdrops and token incentives run dry.

• Do they still have a sticky user base and supportive community?

CASE STUDY

How to Make Sense of Mcaps and FDVs

Credits to @ZeMariaMacedo for the tweet

The most important factor in comparing FDVs is figuring out what % of the token’s FDV is unrealised profits for investors/team.

The higher the %, the worse it is for token holders who buys at the open market. 

Jose broke down some of his findings on the secondary markets:

• Most newly launch tokens have very little bids even at ~70% below market price (these are SAFTs with 1 yr cliff + 2/3 year vesting)

• Bid volumes are at $100m vs future supply unlocks at ~$10B+ 

• “Bullish Unlocks” usually happen when the unrealised gains to market cap ratio (UG2MC) is low. 

• Unrealised gains can be calculated from knowing the “costs”. Teams have 0 cost basis. Early investors cost basis is calculated from the valuation of the round they invested at. 

• Most projects are trading at 4-8x UG2MC, i.e. 4-8x of the project’s circulating MC is unrealised gains for insiders, hidden in the “FDV”. 

• Projects usually float at 5-15%. Assuming a 3 year vest, this means every 4-6 months there’s an entire MC worth of value that is unlocked for people to sell.

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

Decentralised AI Market Map

Credits to @caseykcaruso for the market map.

Casey from Topology VC (early-stage frontier tech firm investing in AI, decentralised systems and neurotech) released a crowdsourced market map of Decentralised AI.

This is broken down into 8 different categories - Data, Applications, Model Creation & Fineturing, Agents, Privacy, Coordination Layers, Compute, and Inference Networks.

FEATURES & GOVERNANCE UPDATE

Jupiter’s Ape Vault

Leading Solana DEX aggregator Jupiter has launched Ape, a memecoin vault that’s designed to make it easier and safer to trade meme coins.

• Only your wallet can access the secure vault.

• There’s a token discovery feature that lets you see tokens as soon as they are launched, alongside their safety profile.

• Ape will automatically optimize the trades by dynamically setting slippage and re-trying transactions if needed.

• Ape is still in alpha.

• During the alpha period, the fee will only be 0.069%.

Other notable feature updates:

• DeBank goes live with XP claim.

• Trader Joe boosts incentives.

• SuperBoring launches on Base.

• Wormhole introduces native USDT.

• ParaSwap announces ParaSwap Delta.

QUICK BITES

• Germany sells another $339M in BTC.

• Bitcoin sees a surge in new addresses.

• Zodia Custody partners with Maple Finance.

• Leah Wald steps up at Cypherpunk Holdings.

• Messi promotes obscure meme coin on Instagram.

• Ethereum L2 sees a yearly low in unique depositors.

• BlackRock’s BUIDL surpasses $500M in market value.

• TON plans to release a new L2 based on Polygon’s tech.

• Kulipa partners with Mastercard and Argent on a debit card.

• PayPal PYUSD surpasses $500M following Solana expansion.

• Arkham CEO anticipates monetizing the platform later this year.

• Worldcoin launches World Chain developer preview ahead of mainnet.

• Polychain’s ex-GP made an undisclosed side deal.

NOTEWORTHY READS & MEME

• Decentralised’s read on people, not decks.

• Ash’s read on token listing strategy playbook.

• Mamba on Base’s read on the GotBit drama situation.

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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.