Wormhole Launches at $10 Billion

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Good Morning. The crypto market is whipsawing, but we’re seeing an increasing number of signs that the bull market is nowhere near the end. Franklin Templeton wrote a report on Ordinals, VC firms launching new funds, and more institutional integration (read: BlackRock, PayPal) are coming.

_{This issue is written by the Launchy team.}

In Today's Email:

• What Matters: Wormhole’s W Debut 🪂 

• Founders Highlight: Micahel & Steve of Neoclassic 👨‍💻

• Deal Flows: Paradigm’s $850M New Fund💰️ 

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WHAT MATTERS

Wormhole’s W Debut & Roadmap

State of play: On Wednesday, Wormhole's governance token ($W) debuted on OpenBook with a price of $1.66, a market cap of $2.9B, and an FDV of $16.5B. A total of 678M W tokens were distributed to early users of Wormhole.

• The airdrop represents 6.78% of the 10B total supply, with 81% of the 678M distributed to on-chain users and 19% to community groups. 

• OpenBook experienced heavy congestion after W was released, rendering it inaccessible to many users.

• W was initially launched as a native SPL token on Solana and will expand to all Wormhole-connect EVM chains using Wormhole Native Token Transfers (NTT).

• W holders will be able to lock and delegate their tokens on both Solana and EVM chains.

• Currently, W is trading between $0.95 and $1.23 with a 24-hour trading volume of $620M, the market cap has decreased to $1.8B, and the FDV stands at $10B.

Why it Matters: W is the governance token of Wormhole DAO that will be launched as an industry-first multichain governance system on Solana, Ethereum mainnet, and EVM L2s.

For builders and investors: W, experienced a price drop, contrasting with the performance of ENA, which saw its price double post-listing. Both tokens debuted with high FDVs.

• Wormhole airdrop's quiet reception compared to the buzz around Ethena's launch highlights the importance of community engagement, and engaging the right communities.

BUILDER-INVESTOR HIGHLIGHT

Michael Bucella & Steve Lee of Neoclassic Capital

Intro: Michael Bucella and Steve Lee are the co-founders and the managing partners of Neoclassic Capital, a digital asset investment firm with a strong focus on Asia.

• Since its January launch, Neoclassic has attracted investments from Marc Andreessen, Chris Dixon, and Jeff Vinik.

Previous background: Before Neoclassic, Michael was a General Partner at BlockTower Capital while Steve was an investor at the same firm. Both Michael and Steve were also the alumni of Goldman Sachs.

• Lee was born in South Korea and spent over 20 years in South Korea, Japan, and Singapore while Bucella is from New York.

The big idea: Michael and Steve through Neoclassic aim to bridge Western crypto companies with markets in Japan, South Korea, and other Asian countries.

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INSIGHTS

MakerDAO/Morpho/Ethena Drama

Credits to Sébastien Derivaux for the original article.

MakerDAO has adopted Morpho for its crypto-backed loans, chosen for its secure, immutable codebase. Here are the key takeaways from Sébastien Derivaux's money-view lens on the MakerDAO/Morpho/Ethena drama:

• The primary challenge in crypto-backed loans is the swift liquidation process in crypto markets when collateral drops below required levels, which may lead to rapid devaluations and forced liquidations.

• MakerDAO previously used a fixed price oracle in a DAI/USDC loan facility, allowing high leverage without immediate market price impacts on liquidations.

• Using a fixed price oracle delays liquidations until accrued interest necessitates it, which can disconnect from real market values, leading to a process known as asset transmutation.

In a scenario where collateral like sUSDe loses value but isn't immediately liquidated due to the fixed price oracle, interest accrual can inflate the debt beyond the collateral's market value.

• MakerDAO can then settle the debt through an atomic transaction, absorbing the collateral and realizing any market losses on its balance sheet.

• This situation underscores the complexities and risks of leveraging fixed-price oracles in crypto lending.

• MakerDAO's direct investment in sUSDe means DAI holders could be affected by sUSDe losses, depending on MakerDAO's equity buffer at the time.

Determining the liquidity between crypto-backed loans in DeFi and direct positions in sUSDe is challenging.

• DeFi loans typically have no set maturity, relying on interest rate adjustments for liquidity, potentially leading to liquidation.

• Conversely, sUSDe positions appear to have a seven-day liquidity period, making it difficult to ascertain which option offers greater liquidity.

DEAL FLOWS

Paradigm Eyes $850M for New Crypto Fund

Deal flows remained strong this week, we saw $189M+ in deals 💼 

According to Bloomberg, Paradigm is currently engaging with investors to raise between $750M and $850M for a new investment fund.

• If finalized at $750M, the fund will be the largest in the industry post-crash.

• The peak of crypto VC fundraising was in May 2022 with Andreessen Horowitz's $4.5B fund.

• In 2021, Paradigm raised a then-record $2.5B fund.

• In September last year, reports suggested that Paradigm is aiming to raise a $1B fund.

• Recently, Paradigm led the funding round in Merkle Manufactory, the dev of Farcaster which valued the company at $1B.

Deal flows in the past week:

• Moongate, $2.1M Seed Round

• Merkle Trade, $2.1M Seed Round

• Camp Network, $4M Seed Round

• Legitimate, $4.3M Seed Round

• Gasp, $5M Seed Round

• Bitlayer, $5M Seed Round

• LightLink, $6.2M Seed+ Round

• Raiinmaker, $7.5M Seed Round

• Zeus Network, $8M Seed Round

• Agora, $12M Seed Round

• SatoshiSync, Unknown Seed Round

• UTXO Stack, Undisclosed $ Seed Round

• Arrow Markets, $4M Series A Round

• dappOS, $15.3M Series A Round

• Ellipsis Labs, $20M Series A Round

• XION, $25M Series A Round

• Midas Protocol, $8.75M Unknown Round

• Sophon, $10M Unknown Round

• IoTeX, $50M Unknown Round

QUICK BITES

• Ripple to launch USD stablecoin.

• Binance set to end Bitcoin NFT support.

• South Korea to tighten crypto exchange listings.

• Ethena Labs adds Bitcoin as a USDe backing asset.

• Bitcoin exchange reserves drop to multi-year lows.

• Sony Bank to conduct a stablecoin trial on Polygon.

• Pendle reaches $4B in TVL and $10B in trading volume.

• Franklin Templeton recognizes the rise of Bitcoin Ordinals.

• The SEC seeks public comments on proposed Ethereum ETFs.

• US PayPal customers will be able to use stablecoin for international payments.

• Spot Bitcoin ETF flows turn positive this week as Grayscale’s GBTC outflows slow.

NOTEWORTHY READS

• Paul Veridattakit’s read on optimizing token distribution.

• Franklin Templeton’s read on the rise of Bitcoin ordinals.

• Dovey Wan’s read on picking chains to expand on as founders.

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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.