#61 Porsche has Entered the Web3 Space. Fantom, from $3m to $1.5bn.
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.
Binance Joins the Proof of Reserves Party
Following the fall (or should I say, downright crash) of FTX, people realized the importance of knowing whether a centralized exchange really has their deposits on hand or has them invested in some infinite loop ponzi-like scheme for generating interest. This is important because, aside from the obvious matter of knowing your funds are safe, you also get the side effect of being resistant to what is called a bank run. In case you didn’t know, there is a thing called fractional reserve banking, which allows banks to lend out a significant amount of their deposits, meaning that if every depositor would want to withdraw their assets right now, they wouldn’t have it on hand - leading to a bank run.
Binance, the largest exchange, saw this opportunity and capitalized on it by announcing its Proof of Reserves system. Available only for Bitcoin right now, it allows users to check two things:
Whether their Bitcoin balance shows up in the tracked Binance wallets, meaning that their funds are available.
Whether Binance’s total Bitcoin holdings are at least equal to the amount of Bitcoin users have on the exchange, meaning that the exchange is covered should everybody decide to withdraw their Bitcoin right away.
It’s important to mention that Kraken, another large (but not as large as Binance) exchange, has released Proof of Reserves in February 2022, before it was cool, and covers 7 tokens to Binance’s 1 (BTC). There is some competition going there as well, as Kraken’s PoR (Proof of Reserves) page contrasts their methodology to, most likely, Binance. Not only that, but Jesse Powell, Kraken CEO, called out CZ’s approach to PoR on Twitter:
All in all, competition over transparency is great and will benefit all users of Crypto. Glad it’s happening.
Mihnea
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Fantom, from $3m to $1.5bn
Remember Fantom? You know, the chain that probably had the most brutal drawdown in terms of TVL, falling ~95% from its’ ATH of ~$8 billion to a mere $461m. 2021 and early 2022 have been good to Fantom’s on-chain activity but little is left today.
If you’ve heard about Fantom then by ricochet you might also know Andre Cronje, DeFi’s “star developer”. He helped build Yearn Finance as well as Fantom, so he definitely knows a thing or two. See that high peak in the graph above? Just around that time, Cronje called it quits with DeFi and everything started to take a turn for the worse.
But just a few days ago, he posted a peek into Fantom Foundation’s financials. And… there’s a lot to unpack. You’re reading this newsletter, so I trust you’re up to speed with the FTX Crash. If not, Mihnea wrote a summary of it a few weeks ago, so go check it out. If you haven’t been liquidated yet, you already beat FTX and Alameda in terms of ROI. But wait until you hear Fantom’s.
Cronje’s article reveals something extraordinary: Fantom Foundation might have had one of the best returns in the industry. It’s no mystery that anyone can turn a good profit in bull markets, and Fantom employed all possible techniques. They started out in 2018 with a $40 million raise, out of which they were left with less than $5 million by the end of the year. By early 2020, they were left with little over $3 million.
2020 is the year of DeFi summer, when everything DeFi took off and liquidity mining was introduced. That’s when Fantom started participating in it and used those stupidly-high (but obviously rewarding) yields. By the end of August, Fantom farmed on Compound and Synthethix and amassed ~$35 million. They 11x’d their holdings in half a year!
They used part of the profits to buy back FTM from the market and hold it in their treasury. Unlike other L1s, the Foundation held fewer tokens at the beginning and preferred to buy them from the market. By being frugal and not increasing spending by a lot, they used the same funds to farm further, using Curve and more. Fast forward to the 3rd of May 2021, they had over $1.5 billion. All that from their $3 million… a 50000% increase. Basically, they 500x’d their initial balance using DeFi. Obviously, that was the peak of their treasury balance.
Today, those funds amount to >$350m, spread as follows:
~$110m in FTM
>$100m in stables
>$100m in crypto assets (value changes as a reaction to the market)
$50m in non-crypto assets
Even today, their ROI is close to 12000% from early 2020, and this is with bear market prices. All the while they’re cash flow positive and have multiple revenue-generating activities. Enough to last them another 30 years at the current burn rate.
Beating (or rather, surviving) Alameda, 3AC and FTX was only the first step. But did you beat Fantom?
Matei
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Porsche has Entered the Web3 Space
After numerous rumours, Porsche has announced its plans to launch an NFT collection as part of a large Web3 strategy. The collection will involve 7500 customized art pieces of the Porsche 911 and will be launched in January 2023 on the official marketplace.
Detlev von Platen (Member of the Executive Board, Sales and Marketing of Porsche AG) has stated the following: "Today, we’ve announced a really exciting project: our entry into the world of Web3 with our first global NFT drop. I know that there has been a lot of discussion and news recently that fundamentally questions the future of the metaverse and NFTs, but I still believe there is huge potential – if approached this space in the right way.”
The artwork is created by Patrick Vogel, a Hamburg-based designer and 3D artist, and the NFTs in this collection are developed around a white Porsche 911 car model. However, the buyers can also influence the appearance and character of their NFTs by choosing from themes of Heritage, Performance, and Lifestyle routes with 150,000 potential variations.
“This project is an additional element of our digitalization strategy”, said Lutz Meschke, Deputy Chairman and Member of the Executive Board for Finance and IT at Porsche, highlighting Porsche’s adoption of web3 beyond digital art. The company is working on integrating blockchain technology into future solutions with the help of its subsidiaries, Porsche Digital and MHP.
This is not Porsche’s first Web3 move. In 2021, Forward31, a company started by Porsche Digital, launched Fanzone, a platform for digital trading cards that uses blockchain technology and also auctioned an NFT through the SuperRare marketplace. Porsche’s move alignes with its group’s, Volkswagen Group, with both Skoda and Audi experimenting with blockchain technology.
Evelyne
For more educational crypto content, check out the links below:
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StakeborgDAO Quarterly Reports: https://docs.stakeborgdao.com/reports/dao-quarterly-reports
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