Portfolio Report for the 2nd Quarter of 2021 (3) — ArkStream Capital
ArkStream Capital invested in about 20 projects in the second quarter of 2021. We will start with a project introduction and track analysis to elaborate on why we invested in these projects: handle.fi, DeepDAO, Evanesco Network, Pontem Network, Unbound Finance.
handle.fi
1. Project Introduction
handle.fi is a decentralized multi-currency stablecoin creation and exchange protocol.
handle.fi allows users to create (borrow) and convert between multi-currency stablecoins; called fxTokens. Initial rollout is targeted for fxTokens representing Australian Dollar (fxAUD), Japanese Yen (fxJPY), Korean Won (fxKRW), Chinese Renmimbi (fxCNY), and Singapore Dollar (fxSGD)
2. DeFi and the Development of Stablecoins
With the development of DeFi, the demand for stable currency pledges has surged. As of the end of June, the market value of stablecoins exceeded 100 billion U.S. dollars, with an average daily trading volume of 500 million U.S. dollars. The development of the stablecoin market has also led to the rise of the entire DeFi market. This mutually reinforcing relationship urges the market to meet the needs of participants Stable currency for hedging, speculation, and payment to support the proportion of revenue from DeFi mining.
The stable currency is over-collateralized with asset pools such as MakerDAO and handle.fi can maintain stable prices through the issuance of full mortgage guarantees of digital assets. This method solves the stability problem to a certain extent. However, stablecoins that anchor the U.S. dollar headed by USDT still face many problems. For example, the depreciation caused by the continuous over-issuance of the U.S. dollar affects the price fluctuations of stablecoins; under centralization, we have to face the fact that USDT is constantly over-issuing. The top 5 stablecoins by market value are all anchored in the US dollar. The US dollar occupies an absolute position in the stable currency market, and a single anchor US dollar cannot withstand foreign exchange risks.
3. Why invest in handle.fi?
The multi-currency stablecoin exchange is provided by handle.fi can settle transactions in local currency, reducing conversion fees and foreign currency risks; efficient conversion between multi-currency stablecoin; introducing Layer 2 solutions and leveraged products, allowing you to speculate on Forex trends, The value imagination space of the traditional Forex market is broader.
handle.fi enables the liquidation of some vaults to ensure the sale of an effective amount of collateral to maintain c-Ratios, optimize the utility of encrypted assets and reduce the risk of liquidation through DeFi first multicollateral vaults.
In addition to the over-collateralization and liquidation mechanism, there is also the function of seigniorage, which can generate more currency. The 1:1 redemption mechanism helps to ensure that fxTokens maintains its pegged value. Part of the treasury liquidation ensures that users will not lose more than the collateral required to maintain their debt positions and pay profits for users’ collateral. This series of functions will help handle.fi occupy a certain share in the decentralized Forex market.
DeepDAO
1. Project Introduction
DeepDAO explores, ranks, and analyzes all DAOs from market value, transaction data, number of members, number of proposals, voter status, and track classification, and provides neutral and objective information to the community to help DAO members make decisions. It includes DAOs created on platforms such as Snapshot, Gnosis Safe, DAOstack, Moloch DAOs, The LAO. Compound Governance, Substrate Organizations (Kusama, Polkadot) will come soon.
2. Explore DAO
In previous investment reports, we mentioned that DAOs related to DeFi governance have begun to gain market favor. But not all DAOs are related to asset management. The current categories of DAOs include governance DAO, application DAO, Yield DAO, Creator&Media; DAO, DAO Adaptor, Guild, asset management DAO, aggregator, and so on.
At present, DAOs on the market are far more than the above categories. DAOs delegate decision-making power to stakeholders. This organizational change and update have accelerated participants’ exploration of DAOs. According to the data on DeepDAO, the total assets on DAO reached 839.5 million U.S. dollars, and the number of DAO members and token holders reached 190.6k (as of July 7, 2021).
Source from: https://deepdao.io/#/deepdao/dashboard
It can be seen from the data that the DAO has been expanding in scale and volume. These members have deepened the exploration of DAO into various fields, such as DeFi, NFT, open-source software development, games, democratic decision-making, energy, freelance, sports, etc. When developers and entrepreneurs put more energy into product iteration, the mechanism of DAO will continue to be explored.
3. Why invest in DeepDAO?
DeepDAO has always maintained the original intention and the essence of DAO, and has more than 2000 DAO organizations and thousands of community members in its development. Eyal Eithcowich, the founder of DeepDAO, has worked for Apple and many Fortune 500 companies. He is also a writer, film producer, and activist across fields. The entire team implements the DAO model, and the exploration of DAO requires these experienced members.
DeepDAO provides a decentralized incubator and funding investment for DAO organizations in the community. These functions are favored by many capitals. We can obtain more high-quality project resources from DeepDao. We have always been optimistic about the development of DAO, which is a unique decentralized combination model, and DeepDAO is similar to DAO’s CoinMarketCap, with the uniqueness and first-mover advantage of DAO track.
Evanesco Network
1. Project Introduction
Evanesco(EVA) is a unique financial protocol platform in the Web3 ecosystem that combines Layer0 network infrastructure with a private computing framework.
2. Privacy Solution
In the past few years, many blockchain projects focused on privacy protection have boomed. Most of the existing privacy protocols are designed based on the UTXO model, which cannot execute complex logic and has poor programmability. Similarly, the account model blockchain is also difficult to protect privacy, because every time a related transaction is confirmed on the blockchain, the balance in the account will be updated.
In the Polkadot ecosystem, projects such as Zecrey, MantaNetwork, and Evanesco that focus on privacy solutions are established through their respective underlying frameworks (for example ZK-Rollup, TEE, Layer0) in asset privacy protection, information transmission privacy protection, and user account information processing. The corresponding solution. The privacy track also needs to consider cross-chain, considering the heterogeneity, massiveness, and diversity of existing blockchain platforms, and propose a general privacy protocol that can adapt to various blockchain networks.
Evanesco’s Layer0 privacy network, from the application layer bastion pool, bastion wallet, P-DEX, P-NFT, P-Token, and other products, began to protect the privacy of block transaction data. Middleware products mainly include bastion accounts, bastion protocols, and bastion privacy pool P-Pool. At the same time, EVA middleware products will support multi-chain ecology, including Polkadot, Ethereum, Solana, BSC, etc., and provide cross-chain privacy assets at the intermediate protocol layer flow.
3. Why invest in Evanesco Network?
The complete EVA privacy financial protocol will cover the underlying infrastructure layer and the heterogeneous multi-chain intermediate layer. EVA not only provides a decentralized, flexible and secure network infrastructure for the encryption ecosystem but also provides easy-to-use for multi-chain And the unified security fortress privacy protocol layer middleware product completes a scalable, high-efficiency, heterogeneous cross-chain privacy asset agreement in a multi-chain ecosystem.
GPoW two-layer consensus mechanism developed based on the computing power proof mining algorithm and Polkadot’s GRANDPA algorithm. The consensus is composed of PoW miners and PoS validators. PoS validators confirm transactions and share profits. PoW miners mint tokens and elect PoS validators. They cooperate with each other to a certain extent to eliminate the potential risks of centralization.
Evanesco integrates asset issuance, management, transfer, and cross-chain interoperability while providing privacy liquidity for wallets, exchanges, and aggregate transaction services. The demand for privacy in the market has always existed, not just from the perspective of transactions. The value that a complete privacy protocol framework can create is more embodied in the value of ecology. The V1 version of the bastion pool product has been launched. Fortress pool products will be launched in V2 and V3 versions one after another. The V2 version will pay more attention to the completion of the user’s investment income while completing the privacy protection of the assets. Bastion Pool V3 will simultaneously realize privacy asset protection and cross-chain asset intelligence investment.
The EVA ecosystem can provide network access and encrypted financial services for a wide range of ecosystems such as Web3.0 applications, NFT, and DeFi.
Pontem Network
1. Project Introduction
Pontem Network aims to build a bridge between the crypto world and Facebook Backed Diem Blockchain Association, enabling the exchange of value between the two, and helping Diem users access most of the use cases in the crypto world. The DApp framework based on Polkadot is used to establish interoperability between DApps built on public chains such as Ethereum and Polkadot and the Diem Blockchain ecosystem which will have a distribution channel the Facebook ecosystem of apps.
2. Libra & Diem
Libra has been under regulatory pressure and has successively lost the support of major partners such as PayPal, eBay, MasterCard, and Stripe. However, Facebook did not give up its footsteps in the digital currency field, renamed Libra to Diem as a stable currency, and decided to obtain cooperation with the Swiss Financial Market Supervisory Authority (FINMA) to obtain a payment service license. According to Facebook’s plan, by the end of 2021 A pilot stablecoin Diem will be launched. In recent developments, Diem partnered with Silvergate bank, known for its relationships with US-based Crypto unicorns like Coinbase, signaling progress in their launch.
Facebook has nearly 3 billion monthly active users, which gives Diem the greatest potential audience in blockchain projects.
Diem may be integrated into transactions on Facebook, Instagram, Messenger, and Whatsapp, such as shopping, paying for advertising, sending money to friends, etc. Diem uses Move, a Rust-based programming language that is safe, flexible, and suitable for writing smart contracts. Many Dapps will appear in the Diem ecosystem.
However, Diem also needs to face strong regulatory measures, which makes it difficult to achieve anonymous loan financial DeFi. In addition, the centralized management method continues a series of problems such as information imbalance, node operation permission, and user KYC verification. They are working to make sure that VASPs (Virtual Asset Providers) as defined by the international regulatory body FATF (Financial Action Task Force) are compliant with KYC/AML and other safeguards.
3. Why invest in Pontem Network?
Polkadot provides developers with a scalable and fully decentralized multi-chain environment, which happens to be the part that Diem will lose. Pontem Network links Polkadot with Diem, writes smart contracts in Move, uses Move VM to compile them, and deploy ready-made products on Polkadot parallel threads.
Pontem acts as a bridge to enable applications on Polkadot, such as DeFi and Diem’s stablecoin, to benefit from each other. With the support of more than 30 domestic and overseas investment institutions such as Web3 Foundation, Mechanism Capital, Kenetic Capital, etc., through Diem’s 3.1 billion Facebook users, it provides KOL with a direct interactive NFT platform.
Diem’s first successful test of over 50 million transactions on their blockchain has allowed many countries to accelerate the pace of R&D and testing for Central Bank Digital Currency (Central Bank Digital Currency, hereinafter referred to as CBDC). At present, in addition to the Bahamas, Uruguay, Ecuador, Venezuela, Thailand, and Cambodia that have issued CBDCs, the central bank digital currencies of emerging market countries such as China have entered the actual testing stage. Facebook could provide the US a way to leapfrog development by allowing Diem to operate within its regulatory boundaries
Although Pontem is a “connector”, its potential for connection is huge.
Unbound Finance
1. Project Introduction
Unbound is using an innovative, debt-free liquidity provision system to build an AMM derivatives layer to release liquidity from the existing AMM pools. It does not charge any recurring interest on the minted assets but just a one-time minting fee. Currently, it supports Uniswap, Balancer, Mooniswap, Bancor, Curve.Fi, etc.
2. Synthetic assets
The entire DEX market in the Q2 of 2021 (April-June) has a maximum transaction volume of approximately US$12.4 billion per day, with an average transaction volume of approximately US$2.5 billion per day. How to create the value of LP to the greatest extent is currently a question that synthetic assets are thinking about.
Synthetic assets mine the value of tokens pledged in decentralized exchanges, and bring more benefits to these liquidity providers. The traditional synthetic asset projects Synthetix and Mirror, which re-borrow and mortgage on mortgage assets, have not tapped the undiscovered value in DeFi, and there are risks of liquidation and runs.
3. Why invest in Unbound Finance?
Unbound is one of the first projects to launch aggregator contracts and strategies on Uniswap V3 to provide centralized liquidity. Unbound seizes the composability and permissionless characteristics of DeFi, and utilizes the illiquid LP tokens, which is potentially releasable liquidity. Users can lock their LP tokens in Unbound which they receive after providing liquidity on various AMMs. Based on the value of the LPTs, they can mint interest-free synthetic assets without the fear of liquidation of their underlying LPTs since Unbound does not have a liquidation engine which makes it unique. Along with interest-free synthetic assets minted on Unbound, users will continue to reap the benefits of trading free and yields from their existing AMMs, thus making the money market more efficient.
Unbound is building a cross-chain bridge that includes Ethereum, Binance Smart Chain, Polygon, Harmony, and Solana, which will enable more application scenarios of the UND stable currency in the future and increase the combination of synthetic assets. Uniswap, Balancer, PancakeSwap, QuickSwap, SushiSwap, and other mainstream AMMs all support Unbound, and they will provide a large number of LPs to flow into Unbound.
Unbound’s flexible combination method and the stock LP brought by the DEX market provide a huge room for imagination in the characteristics of composability.
About ArkStream Capital
Founded by @Block_Ark, ArkStream Capital is a token fund dedicated to growing Web3.0 unicorns. Our portfolio includes Efinity, Calaxy, HOPR, Xend, Litentry, etc.
Website: https://blockark.io
Twitter: https://twitter.com/ark_stream
Twitter: https://twitter.com/Block_Ark
