Is Sequoia Out of Crypto?

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Good Morning,

We got a lot to cover, but first thing first, a quick announcement:

Tomorrow we’re releasing the first issue of our written interview series with crypto investors. It will be a weekly series where you get to learn about recent investment thesis, their backgrounds, and what’s going on behind the scenes.

If you would like to participate in a future episode, DM me here.

As we close the week, crypto funding soared back, many features are being shipped, and lawmakers are continuously trying to assign “controllers” to DeFi projects.

Let’s dive in.

In Today's Email:

• What Matters: Sequoia sheds crypto investors 🪂

• Founders-Investors Highlight: Guy Young of Ethena 🎭

• Deal Flows: $125M CoinDesk acquisition 📺

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WHAT MATTERS

Sequoia Capital Sheds Crypto Investors

State of play: According to a note sent to investors, Sequoia Capital parted ways with two crypto investors as five partners left the firm in a team reshuffle.

• The two crypto investors are Daniel Chen and Michelle Fradin. They led the decision to invest in FTX.

• Following the collapse of FTX in 2022, Sequoia experienced considerable reputational damage and incurred a loss of $213.5M.

• According to Sequoia, the cost basis of the investment represented “less than 3% of the committed capital of the fund."

Why it matters: The departure of Chen and Fradin signals that Sequoia is more likely to pull back on its crypto-related investments. It also shows that the firm takes accountability, similar to what Temasek did after its FTX investment.

For builders: The move does not mean that Sequoia is completely out of the crypto game.

• The firm’s non-US entities (China, India, and SEA) are still investing in crypto. Just yesterday, Sequoia China co-led a seed round for dappOS, a Web3 Operating Protocol.

For investors: The pullback from massive Web 2 brand names venture firms is a good thing for the space.

• During the bull cycle peak, crossover funds such as Tiger came into the crypto scene and propped up valuation to sky-high.

• Sobriety is coming to crypto early-stage funding, and that’s healthy for the space.

BUILDER-INVESTOR HIGHLIGHT

Guy Young, Founder & CEO of Ethena Labs

Guy Young is the Founder and CEO of Ethena Labs, a project that is developing a decentralized stablecoin and digital savings bond backed by derivatives.

• Ethena just raised $6M in seed funding led by Dragonfly with participation from numerous other investors, including Arthur Hayes, Deribit, Bybit, OKX, Gemini, Huobi, and others.

• The funds raised will be utilized by Ethena to prepare for the launch of its products in Q3 2023.

Previous backgrounds: There is no information available regarding Guy Young’s background.

• Perhaps it’s a smart thing to be a fairly anonymous founder when you’re creating a new decentralized stablecoin.

The big idea: Ethena aims to establish a global alternative to banking systems with its stablecoin and savings bond, offering decentralized and accessible wealth preservation and growth.

• Ethena's stablecoin and savings bond will be based on the Ethereum blockchain.

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

Chainlink’s CCIP Live on Mainnet

Chainlink's Cross-Chain Interoperability Protocol (CCIP) is a secure cross-chain messaging solution specially developed to prioritize security.

In simple words, CCIP will make it easier to send funds across blockchains.

• Sergey, the founder of Chainlink, anticipated that eventually there’ll be permissioned blockchains that connect with permissionless blockchains. He wants Chainlink to be the facilitator of funds when that future comes.

• Here’s a good summary from ChainLinkGod.

• Currently, CCIP is generating ~$30,000 in daily revenue, which amounts to more than $10M in ARR — only a few days after the launch.

DEAL FLOWS

$125M CoinDesk Acquisition (Soon)

Deal flows soared 📈 — we saw $550M+ in deals.

A group of investors is close to finalizing a $125M agreement to acquire CoinDesk. The investor group is led by Matthew Roszak of Tally Capital and Peter Vessenes of Capital6.

DCG, the parent company of CoinDesk, is likely to maintain a stake in the media, events, data, and index business after the deal. This part is unclear, as that’s the majority of CoinDesk’s… business? We’ve to see after the deal truly closes.

• The existing management team of CoinDesk is expected to remain in their positions.

• DCG received numerous unsolicited offers above $200M, as per insiders. In 2016, DCG acquired the media company for $500K.

• CoinDesk generated $50M in revenue last year

Deal flows in the past week:

• dappOS, Undisclosed $ Seed Round

• Interface, $1.4M Seed Round

• MetaCeneGame, $5M Seed Round

• Ethena Labs, $6M Seed Round

• Cosmic Wire, $30M Seed Round

• Manta Network, $25M Series A

• Risc Zero, $40M Series A

• Futureverse, $54M Series A

• Skyplay, $10M Unknown Round

• Echooo, $15M Unknown Round

• Radiant, $10M Strategic Round

• Coinfund, $158M Venture Fund

• Polychain Capital, $200M Fund IV

QUICK BITES

• Sequoia sheds two crypto investors.

• Lummis, Gillibrand revamp US Crypto Bill.

• Nasdaq halts plan for crypto custody service.

• House Republicans push for new crypto rules.

• Gensler wants $109M to help SEC rein in crypto.

• Coinbase plans to wind down its lending program.

• FTX Leadership seeks $1B return from former executives.

• UK Financial Regulator plans to launch a digital sandbox.

• VCs to be held liable for DeFi sanctions violations under new US bill.

• Societe Generale’s Digital Asset Unit gets first French crypto license.

MEME & NOTEWORTHY READS

• Variant Fund’s read on decentralized infrastructure networks.

• Fortune Crypto’s read on Ben McKenzie's ill-informed crypto book.

• Decentralised’s read on value accrual in crypto.

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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.