#21 Tether released its latest assurance report on its reserve holdings. What you’ve missed at Denver ETH.
Disclaimer: Everything we write in "The Crypto Insider Report" is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
A Rollercoaster Ride for DAO Treasuries
If you have been following Crypto for at least the past few months, you most definitely heard about DAOs. They are one of the strongest buzzwords of the domain and, in many ways, for good reason. A good metric for following this field is the total treasury value. While anyone can make a DAO, just like anyone can start a company, it is of more relevance what kind of value these vehicles accumulate, and the easiest way to measure that is the treasury - the amount of financial resources under a DAO’s control.
DeepDAO is the perfect tool for tracking such metrics. Think of it as a CoinGecko/CoinMarketCap for DAOs. Using it, one can find the total treasury value for any of the tracked DAOs, and this is exactly what media outlets have done to track the evolution of the space over the last year.
Why a rollercoaster ride? Well, towards the end of the year (Dec 31st to be exact), Cointelegraph wrote that DAO treasuries surged 40X in 2021. Putting together all that we’ve seen the past year, it’s not much of a surprise. First of all, the total Crypto[currency] market cap went from ~800B in Jan 2021 to ~2600B in Dec 2021. Then, aside from NFTs (which are not tracked in the total market cap), DAOs were the hottest trend. However, most DAO treasuries consist of large amounts of their own governance tokens, which leads to two main issues - 1. If DAOs want to make an investment through the market, they have to sell their own tokens, potentially lowering the value of the token and thus of the treasury itself; 2. When the market goes down (like in the past months), their treasury goes down in value as well. Messari wrote about this at length. The result? We now get news like Decrypt's latest, counting the total decrease in value of DAO treasuries (over 3.1B in the past month).
As the DAO landscape matures, we will probably see DAOs turning to diversified treasuries containing significant positions of stablecoins, giving them flexibility to make moves regardless of market sentiment.
Mihnea
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Tether and the latest assurance report on its reserve holdings
Tether Holdings Limited is a stablecoin issuer of USDT, a digital asset that is backed by fiat collateral and supposed to have a “fixed” value of $1.
Following the settlement with the NY Attorney General in February 2021, Tether was obliged to provide, by category, the assets backing tethers. Since then, Tether has started issuing quarterly attestations reports highlighting its reserves breakdown. These reports are part of the assurance services offered by independent accountants; however, these are not full scale audits - Tether’s General Counsel mentioned in a CNBC interview in July 2021 that the Company is working towards that stage. At this point, MHA Cayman, a subsidiary of MHA MacIntyre Hudson, which is the UK member of Baker Tilly International (one of the top 10 international accounting networks), is providing an opinion on the report.
Its latest report as of 31 December 2021 shows that its consolidated assets exceed its consolidated liabilities, i.e. the total amount of assets that back the issued digital assets are higher than the amount of stablecoins in circulation. The charts below show the reserves breakdown evolution over the past year. Some considerations:
The types of instruments that Tether invests in are not that different from the ones found in other treasury management activities.
Breakdown has improved over the quarters from a liquidity point of view.
A high allocation in commercial paper was seen as problematic in the past given the level of details provided on the company names, locations or types of instruments. There has been a meaningful reduction in this category (50% in March to 31% in December). Commercial paper is a form of short-term debt commonly issued by companies to finance their short-term needs. Tether has also started providing credit ratings for its CP and breakdown of maturity levels. >97% of its CP is A-2 or higher and >55% has a very short-term maturity (0-90%), meaning these are highly liquid instruments.
Since March, Tether has significantly increased its reserves in Treasury bills, which now consist of 44% of total assets.
Increase in holdings of money market funds, which are fixed income mutual funds that invest in debt securities with short maturities and minimal credit risk.
Less liquid instruments (i.e. other than cash, cash equivalents and commercial paper) have decreased in proportion to the total assets.
Fiduciary deposits (offshore banking liquid assets) have been replaced mostly by T-bills.
Tether’s General Counsel has mentioned that reserves are not fully in dollar instruments, but are fully reserved and backed.
Razvan
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The VEVE Trilogy (After Credits Scene)
Tony Stark once said in Avengers Endgame: "Part of the journey is the end."
The story is far from over, but we'll need a conclusion.
The Good:
Really user-friendly app, an easy adoption for everybody; most of the best-known names in the entertainment industry are here to stay and getting more and more involved.
The Bad:
Really hard to land a drop, lots of bots, many users pushing a button at the same time, connection issues.
The Ugly:
It's all a centralized system so far. As I said, you can only buy-in and, as we saw a few days back, they can change things when they feel to, even the special title of First Editions and First Appearances
So what's the solution to make it better? Simple, the X-factor (see Part2).
Veve has already moved the NFTs on the ImmutableX L2 Chain and is getting ready to integrate the OMI utility inside the app (and that's another story).
Until then, some people will be waiting, some will be happy that others are waiting, some will think is just a brilliant marketing strategy and that they will never let go of the control and some are so eager and looking forward to the VEVEverse; some think they are already too expensive, yet some understand that everything is just getting started. It's true, a 5.000$ Seacret Rare NFT is big money, but with 1.6ETH, you cannot buy so much on Open Sea in a great collection that you know is not going to scamp you in the end.
I'll end with this and talk some more in the weeks and months to come.
You discover an App that holds the memories of your childhood, your parents, and your grandparents, and you have an opportunity to own a part of those memories. You don't know yet for sure how long it is going to take until then, but you understand that these names are more careful with their Brands than countries are with their citizens.
You see that the NFTs inside can have one of 5 rarities: Common, Uncommon, Rare, Ultra Rare, and Secret Rare and you understand, without needing an explanation, which one is the best one to own and the most valuable of them all.
You try to land a drop, random one, hoping on a Seacret Rare, but most of the time, when you even get one, you get a common. You see people around landing multiple ones because they're using bots and you get frustrated; you try to buy from the secondary market, understanding it might be just the beginning and you go on and on and one evening, laying in bed, you realize that most of the time is about the thrill of participating, of being there in the midst of the superheroes battle.
You understand that even a common one will make a difference in your portfolio when it has a First Appearance attached to it because people crave unique things. And, as you can only make a first impression, you can only have on the first appearance. Time will tell.
You're a child again, happy, frustrated, back to happy and, besides this, you own da f*king thing. It's not just gonna lay somewhere in a box that you find just twice every 10 years, it's gonna be there with you, linked to your digital self. Sometimes is terrifying, but it's already happening, we're moving our brands there, more and more. And the utilities have not even been revealed yet.
On top of this, VEVE is launching also the Master Collector Program. And this is for you because you are not just a collector, you are THE collector.
Cosmin
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Key Takeaways from Denver ETH
ETHDenver is an annual ethereum-focused summit where thousands of innovative minds come together to gather and share knowledge about the most relevant narratives in the crypto space. Taking place on February 17- 20, 2022, this year’s event took place at the Sports Castle, a degenerate aesthetic building originally constructed in 1927 that perfectly matched the ethos of the event.
Participants focused on tackling a range of challenges concerning the ecosystem but the subject of DAOs was particularly debated, highlighting once again that 2022 is going to be the year of DAOs. Below we put together a list of what we consider to be the top 5 most relevant talks of this year’s conference.
Ethereum co-founder, Vitalik Buterin, that called himself a tech-phylosepher during The Stakeborg DAO Talks hosted by Vlad Mercori, took the stage twice talking about the Digital State and how Ethereum can work with many nations to create cohesive and regenerative societies as well as his ongoing transition to a role as a public intellectual and announcing a forth coming book on development theories in different technological fields, in a talk titled ‘The e-theory-um blockchain’.
Using many biology analogies , Tracheoptery speaks about ways of contributing to DAOs in the most efficient way, stating that the first step any contributor has to make is to stop outsourcing the responsibility for ther actions and desires. He also uses a Japanese model called Ikigai that he altered for DAO structures to provide a framework for those just starting.
Sandeep Nailwa, Polygon Co-Founder took the main stage with a thoughtful session on the future of decentralized governance stating that
“decentralized governance communities are able to bring together unique backgrounds and expertise, allowing for the unique crystallization of ideas,”.
Joseph Lubin, CEO & Founder of Consensys, that about DAOs being the solution for the systems that are currently breaking down, stating that ‘the power has always been with the people but these didn’t have the mechanisms that enabled capital to be gathered from the people, and therefore power to be gathered form the people and then utilized in governance and decision making to create new value’.
In this talks Danny Ryan, Ethereum researcher explains the changes that PoS brings as well as what remains the same. He also realised a comparison between PoW and PoS, with an emphasis on security. On the same topic, MacKenzie Sigalos, CNBC crypto reporter hosted a panel formed of Cayman Nava, Alex Stokes and Preston Van Loon with whom she unfolded the road to Ethereum 2.0.
Evelyne
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For more educational crypto content check out the links below:
The Stakeborg DAO Talks on YouTube: https://www.youtube.com/playlist?list=PLOrFZZifNn4Nx4nSQL3WS52ALPXgrTSVG
Discord channel: https://discord.com/channels/901898461568442458/903006233584341052
StakeborgDAO Quarterly Reports: https://docs.stakeborgdao.com/reports/dao-quarterly-reports
Thank you , guys! 👨💻👷🏻♂️👌
big Cheers to Evelyne & The Team !