Web3 B2B SaaS - Is it Worth Building? (TAM Analysis)

GM folks 👋🏻 - its a fairly quiet hump day, let’s get to the news 🐫.

Crypto markets bounced back after ETH fell briefly below the $1,500 level. Total market capitalization is hovering around ~$1.1 trillion. Although the stablecoin news are arguably getting worse, the market seems to be juiced up by Blur’s token launch 🧃

Also, we’re launching a referral program! Receive our list of “Must Follow Up-and-Coming Crypto Twitter Account” 👩🏻‍💻 — scroll down to the end to check it out 👇

In Today's Email:

• What Matters: More on stablecoins and banking relationships ⚖️

• Case Study: Web3 B2B SaaS total addressable market 💸

• Features: Blur launches its token 💧

WHAT MATTERS

Stablecoin Update and Crypto Banking Relationships

State of play: The most important development in crypto is still around stablecoins and banking relationships. Here are the critical developments in the past few days:

• Coinbase banking relationship with JPMorgan is intact amidst regulatory scrutiny.

• Paxos burned $700M BUSD due to redemptions in 27 hours.

• Morgan Stanley emphasized the importance of stablecoins, stating that stablecoin issuers will likely have to register, and that the asset class is a "simple indicator of institutional demand for leverage, which influences prices,".

• Silvergate shares soared as Citadel Securities and Susquehanna Advisors Group announced their stake in the company. Other notable owners are BlackRock and State Street Bank.

• Circle alerted NYDFS about BUSD in 2022, but rumors circulated that action against USDC will also be announced.

People in crypto Twitter are arguing about the future of stablecoins. The most obvious outcome seems to be that every centralized stablecoin provider will eventually be required to KYC its users, starting at the offramp level, before eventually expanding to on-chain.

• This is a non issue for institutional investors. However, decentralization proponents are not big fans of the idea. That said, what are the solutions? Algo stables have proven times and times again to be the nuclear sector of the crypto ecosystem. The upside is not worth the risk.

Why it matters: Without a dominant centralized USD stablecoins such as USDC or USDT, the dynamics of the crypto market will revert back to pre 2017 era, whereby people trade altcoins against BTC and/or ETH pairs.

• This not only makes the market extremely inefficient, it hinders the overall growth of the industry as stability in value is critical, whether it be for projects managing treasury or for funds managing their NAV.

For builders and investors: To not sound like a broken record, there are two possible outcomes or ideation that need to emerge in order for stablecoins to succeed.

(1) A strong country replacing USD as the stablecoin of choice for crypto. Credits to @tomiwa1a

(2) “A sufficiently decentralized” solution. We’re not entirely sure how this exactly looks like, but it will need to incorporate over-collateralization and some sort of regulatory capture play that leverage Emerging Markets interest in crypto.

CASE STUDY

What’s the TAM of Web3 B2B SaaS?

State of play: Today we’re bringing you an analysis that was originally done by Tomasz Tunguz. In short, we’re trying to assess the Total Addressable Market (TAM) of web3 B2B SaaS companies. We updated his model using the same data source, Token Terminal’s revenue data.

The time frame being assessed is the past 1 month. We want to see how these companies/projects performed during the bear market.

• 105 web3 companies generated on-chain revenue.

• 22 web3 companies generated more than $500,000 in revenue.

• Ethereum generated the highest revenue at $118.9M.

• Total revenue generated is ~$185M

We'll assume that a typical web3 company spend 30% of revenue on software. This implies that web3 B2B SaaS TAM using data from the past 30 days is approximately:

• $55.5M/month including Ethereum ~ $666M/year

• $19.83M/month excluding Ethereum ~ $237.96M/year

At a 10x revenue multiple, this means that valuation should be somewhere between $2.38B to $6.66B. However, Ethereum alone commands a large majority of that valuation, which indicates that the overall web3 SaaS space is still incredibly tiny. In comparison, customers of just the web2 CRM market alone spend $57 billion annually.

In general, we agree with Tomasz’s view that selling web3 SaaS solutions to web2 companies is still a significantly better business model, given how small the web3 native SaaS space still is.

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FEATURES & GOVERNANCE UPDATE

Blur Launches Its Token

Blur has launched its token. The NFT marketplace that was launched in October 2022 rose to massive popularity in the past few months. Part of the reason is because of its airdrop programs. Yesterday, airdrop recipient could finally claim their BLUR token.

• Airdrop recipients have 60 days to claim their BLUR tokens.

• BLUR is simply a governance token. Tokenholders might be able to profit from the marketplace’s success in the future.

• The max supply of BLUR is 3 billion, which will become accessible over the next 4-5 years. Full tokenomics details are available here.

• Some people including ZachXBT criticized the Blur team as trading was already available prior to any publicly available tokenomics document.

More impressive stats:

• In four months, 146,823 users have traded over $1.2 billion worth of NFTs on Blur.

• Blur is currently raising at a $1 billion valuation.

• The price of BLUR dropped sharply hours after the token launch. It went from approximately $5 to $0.8. It currently has a market cap of $280M at a fully diluted valuation of $2.33 billion.

Why it matters: Competition is always a good thing. For the longest time, OpenSea has been the king of NFT marketplaces, while having practices that drew criticisms from the public. In any industry, the existence of another major player is always a net positive for the end consumers.

• Blur also shows that a carefully curated growth hacking strategy via token airdrops can work, even if the token price might suffer briefly during the initial launch. With the airdrop incentives, Blur was able to capture close to 50% of the NFT market share while maintaining a less than 11% wash trading volume.

Other notable feature updates:

• AAVE integrates Rocket Pool’s rETH.

• AAVE launches GHO stablecoin on testnet.

• Canto updates inflation parameters (30% reduction).

• Ethereum activates Zhejiang testnet Shapella upgrade.

• Optimism announces airdrop #2.

• Acala launches EVM mainnet.

• Chiliz launches EVM-compatible L1.

• Cryptex launches JPEGz NFT index.

• Dell joins Hedera governing council.

• Camelot partners with PlutusDAO.

• Camelot partners with Lyra.

• Flux Finance goes live.

• Silo launches on Arbitrum.

QUICK BITES

• Paxos ordered to stop issuing BUSD.

• Paxos burns $700M BUSD in 27 hours.

• Paxos “categorically disagrees” with the SEC.

• Coinbase CEO vists Washington DC for regulatory push.

• Circle warned NYDFS about BUSD.

• Bakkt exits consumer business, focusing on B2B.

• Binance CEO comments on algo stablecoins.

• Elizabeth Warren pledges to reintroduces crypto AML bill.

• Morgan Stanley comments on stablecoin products.

• Lido DAO considers selling $30M worth of ETH.

• Blur NFT Marketplace launches its own token.

• Citadel and Susquehanna bought Silvergate shares.

• Magic Eden cuts 15% of staff.

MEME & NOTEWORTHY READS

• Ignas’ thread on DeFi stablecoin bullish case.

• @whospay_intern’s thread on Ark Invest crypto report takeaways.

• Dirty Bubble Media’s article on stablecoin shadow banks.

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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.