🍣 Sushi Subpoena: Why Builders Need to Be Careful
Valuing $ARB at $9B | MakerDAO’s Next Step
Good morning 👋🏻
The white house blasts crypto in its annual economic report.
A tonal change, from somewhat agnostic to adversarial. The report states that there’s little value in crypto, urging lawmakers to “apple the lessons that civilization has learned… in regulating crypto assets.”
In Today's Email:
What Matters: Sushi received SEC subpoena 👨🏻‍⚖️
Case Study: What’s $ARB token price? 🤔
Governance & Features: Maker endgame development đź’µ
Narratives: Still on Arbitrum. Pay attention to protocols that received a lot of $ARB tokens such as GMX and MAGIC. Incentive programs and pool2 rewards will start.
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WHAT MATTERS
Sushi Received SEC Subpoena
State of play: DeFi protocol Sushi and its CEO Jared Grey got served by the SEC with a subpoena. The DAO is cooperating, but seeks $3M in USDT for its legal defense. The vote is ongoing with 75% saying yes.
The funds will come from a combination of: Kanpai fees, grants, and selling SUSHI on the market đź’°
The funds will cover all legal expenses including attorneys’ fees for core contributors that have been active since the ratification of Sushi 2.0.
If the funds deplete, the DAO will make $1M available until all legal proceedings conclude.
Why it matters: This is another landmark legal battle that will set a huge precedent for builders and investors in the future. Sushi is an important aspect of the DeFi ecosystem. As a de-facto DAO without any real leaders, legal action against Sushi indicates that DAOs are not safe from regulatory scrutiny.
For builders: Whilst launching a token is one of the best bootstrapping mechanisms, one needs to do it properly in the current climate. Sushi most likely received their subpoena because of revenue sharing mechanism of xSUSHI 🤔
For investors: Builders are in need of your support, now more than ever. Investors should help alleviate as many non-operational concerns as possible by providing strategic advice and resources in the current regulatory climate. Most early-stage projects won’t have the legal fees nor the operational excellence to handle this in-house.
CASE STUDY
What's $ARB Token Value?
State of play: $ARB token airdrop will happen tomorrow, March 23rd. 1.275 billion worth of $ARB tokens will be available. Large exchanges are already announcing listing and trading pairs. Let’s take a look at how people are valuing $ARB.
$ARB IOU on various centralized exchanges traded at around $10 at launch.
It’s now trading closer to $7, which implies a market cap of $8.9 billion and an FDV of $70 billion. For reference, this will put Arbitrum in the top 11 crypto assets by market cap, right between Polygon and Solana 🤯
However, that’s an optimistic outlook. Let’s take a look at a few more case scenarios:
@OlimpioCrypto - $0.65 - $1.20 | Estimation is based on moderate to optimistic evaluation of Arbitrum’s TVL, FDV, and % of tokens unlocked.
@Artemis__xyz - $1.60 - $2.52 | Estimation is based on Arbitrum’s TVL, fees, or daily active addresses.
@InsiderFuture, $4 - $6 | Estimation is based on Arbitrum’s FDV/TVL ratio by looking at the average FDV/TVL ratio across other L1 and L2 protocols.
0xHamz made the most interesting observation. Rollups like Arbitrum makes money from sequencer margins. This margin comes from processing transactions off-chain at cheaper fees before batching them back up and logging onto the L1 chain.
If every transaction costs x and it costs y for Arbitrum to batch these transactions, its sequencer margin is x - y. This translates to $0.25 per $ARB at the current daily transaction run-rate of 1 million transactions per day.
Our take: Arbitrum will trade at a premium. The secret sauce is EVM liquidity + being “fast enough” for unique dApps such as GMX and MAGIC. While Solana is faster, it is further removed from the center of on-chain liquidity, Ethereum and other EVM chain.
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FEATURES & GOVERNANCE UPDATE
Maker Endgame Overview
MakerDAO’s next step. Rune Christensen, the founder of the leading decentralized stablecoin protocol Maker, has published a thorough explanation of the Maker endgame and governance revamp plan 📝
Endgame will establish Constitutional Voter Committees (CVC), which are open structures composed of MKR holders. CVCs will then propose key decisions known as Governance Strategies.
Endgame will implement The Sagittarius Engine (SE), which will encourage MKR holders to lock and delegate their tokens for a Governance Strategy. It will be similar to the process of picking a political party in a multi-party democracy. SE users will receive compensation for their participation.
Endgame will restructure MakerDAO’s governance hierarchy, establishing smaller SubDAOs with their own governance tokens.
Why it matters: The plan has been a controversial one, with brilliant people arguing for or against the plan 🤺 -- which isn’t surprising as it will be one of the most significant update to one of the most important protocols in DeFi.
Other notable feature updates:
QUICK BITES
Coinbase pauses support for SigNet.
Coinbase argues an arbitration case in US Supreme Court
White House blasts crypto in economic crypto.
Sushi hits with SEC subpoena, seeks $3M legal defense fund.
EU’s MiCA schedules debate for April 18.
IRS formalizes NFTs tax treatment as collectibles.
FTX sues control of Bahamas Assets.
Florida proposes law to band CBDCs.
Polygon-Immutable partners to expand web3 gaming ecosystem.
Euler Exploiter wants to return funds.
Sony files a patent for NFTs related with in-game assets.
MEME & NOTEWORTHY READS
Person can’t catch a break
— Trung Phan (@TrungTPhan)
11:51 PM • Mar 19, 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.