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Deep Research

CLICK HERE for the full copy of this report in PDF format. Avalanche (AVAX) is a next-generation smart contracts platform that’s structured as a publicly-owned crypto network protocol. Ava Labs supports the Avalanche protocol in its mission to build a high-performing, secure, and energy-efficient cryptonetwork for decentralized applications (dApps), novel financial primitives, and new interoperable blockchains....

Avalanche: A Novel dApp Protocol for the Internet of Finance
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CRYPTO SPECIAL REPORT: Avalanche: Building a Novel dApp Protocol for the Internet of Finance

CLICK HERE for the full copy of this report in PDF format. Ava Labs is building the Avalanche protocol which expects to deliver the highest performance, most secure, and most energy efficient general-purpose cryptonetwork for highly decentralized applications, novel financial primitives, and new interoperable blockchains. Using its innovative Avalanche consensus mechanism, the protocol hopes to create a new digital crypto-native economy for frictionless real-world and digital asset exchange, composable financial application primitives and derivatives, Web 3.0 privacy-focused data and social applications, and more. Avalanche expects to scale these use cases for global userbases.  The Avalanche core team consists of seasoned professionals and distributed systems researchers. As the CEO and Founder of Ava Labs, Dr. Emin Gün Sirer is a former professor of computer science and networking systems at Cornell University. He developed Bitcoin-NG, a bitcoin scaling solution, and Bitcoin Covenants, a security solution. To develop the Avalanche protocol, he successfully built a team with experience in institutional finance, private markets, and technology (Slide 3). Avalanche aims to build on earlier breakthroughs to develop a fully internet-native economy. Early cryptocurrencies offered global, decentralized, non-sovereign, digital money. The second wave of crypto platforms built on the core technology and enabled the creation of ecosystems of programmable dApps. These dApps included DeFi products, NFT collectibles, and other yield-generating apps and use cases. However, these platforms haven’t proven themselves to be designed for every use case. Now, a third wave of cryptonetworks are aiming to support a wider range of dApps on cheaper and faster blockchains. By offering a dApp platform with low fees, high scalability, and network interoperability, Avalanche believes it will enable the creation of a fully digital economy on a global scale (Slide 6). Avalanche is organically growing a comprehensive DeFi & Web 3.0 ecosystem. Third-party developers are rapidly deploying new DeFi products on the Avalanche (Contracts) C-Chain. These decentralized applications span decentralized exchange, liquidity mining, lending, synthetic assets, and more (Slide 7). Avalanche’s unique, multi-chain framework enables core functions to interoperate seamlessly, without causing performance degradation as we see in networks that pile all activity into one chain. This is leading to rapid, precipitous growth of assets, applications, and custom implementations on subnets tailored to enterprises and institutions (Slide 9). Network metrics are competitive with top protocols in terms of scalability, security & speed. In order to host a wide range of decentralized applications and build a robust digital economy, the blockchain base-layer must offer decentralization, security, and scalability with low transaction fees. Avalanche’s mainnet already offers a transaction settlement layer with characteristics that are highly competitive with the leading staking networks and proof-of-work cryptocurrencies across these metrics (Slide 11). Additionally, AVAX’s proof-of-stake consensus incentivizes token lockups with high staking rewards (Slide 13).  Partnerships may help bootstrap network adoption and growth. The Avalanche protocol is a young network that initially launched its mainnet in September 2020, yet it already boasts an impressive ecosystem of partners, integrations, and third-party applications. Beyond DeFi and Web 3.0, the Avalanche Foundation and Ava Labs are building out tooling and infrastructure to support a wide range of crypto products and use cases. Integrations with the leading crypto exchanges, wallets, stablecoins, and asset tokenization projects could fast track adoption and incentivize users to engage with the Avalanche network (Slide 14). What could go wrong? Avalanche fails to execute on its roadmap, competing layer-one protocols or second-layer solutions iterate faster and deliver scalable cryptonetworks, Avalanche fails to attract significant developer mindshare and adoption.   Bottom line: Although the network is young in its growth and development, Avalanche implements an interesting consensus mechanism that may successfully deliver a scalable and interoperable cryptonetwork to enable a global and fully digital economy of decentralized financial applications and Web 3.0 personal data sovereignty.  Key slides from this report... Cover Page (Slide 1)... Avalanche Aims To Develop A Fully Internet-Native Economy (Slide 6)... Focused On Building Comprehensive DeFi & Web3 Ecosystem (Slide 7)... Avalanche Consensus Is Competitive With Leading Protocols (Slide 8)...​ Building Ecosystem In Fastest Growing Crypto Segments (Slide 14)...

Bitcoin SV: BSV Blockchain-as-a-Service (BaaS) for big data applications

CLICK HERE for the full copy of this report in PDF format. BSV is the native token of the Bitcoin SV blockchain. The BSV blockchain uses a public software protocol derived from the Bitcoin codebase. BSV has restored certain Bitcoin technical protocol features to target use cases that require massive scaling. One key adjustment BSV implemented was removing any default limit on block size. The approach is designed to enable higher throughput and lower transaction fees, allowing developers to build applications that send micropayments (even fractions of a U.S. cent) for user activity, and data-rich enterprise and consumer decentralized applications (Dapps) with the BSV blockchain serving as the underlying public infrastructure. The BSV ecosystem also seeks to create a “Metanet” that uses BSV’s micropayment and big data capabilities to power a better, more commercial Internet where users’ online activity and data can be monetized through the BSV blockchain and digital currency (rather than having users rely upon today’s “free” online and social media services that trade upon selling consumer data); A crucial step in establishing the Metanet as a widely used protocol layer is enterprise adoption, which the BSV ecosystem has been working towards since launch. BSV companies have been building Blockchain-as-a-Service (“BaaS”) infrastructure platforms to simplify the process of deploying applications on the network to increase adoption.  Transitioning Big Business to Web 3.0: The Internet’s (“Web 2.0”) current centralized infrastructure facilitates a data oligopoly in which a few large players (Big Tech) control many of the access points and much of the value accretion of Internet-native applications. As an alternative, blockchain developers are constructing decentralized Web (“Web 3.0”) approaches that aim to offer users the ability to control, authorize access to, and monetize their own data – because the data can be stored or managed on the BSV blockchain, and users can be rewarded in small BSV micropayments for their data. Approaching Blockchain Big Data Applications: BSV is one of the 3 main Bitcoin source code chains (a split from the Bitcoin Cash (BCH) chain, which itself split from the BTC codebase) but the BSV and BTC networks are going after very different use cases. BSV is positioning itself as a Web 3.0 platform upon which Dapps and enterprise data applications are built that can store data directly on the main blockchain layer (efficiently, for low fees) due to its unbounded block size cap. This approach has trade-offs but is unique relative to other blockchains as it allows for certain types of big data applications that may not be well-suited for other networks. BSV Blockchain-as-a-Service (BaaS) Infrastructure Solutions: To help make app development and enterprise adoption of BSV simpler, BSV companies have been working towards developing infrastructure and tooling for the network. At a high level, the BSV Metanet is an infrastructure layer that organizes the storage of and access to all types of data on the public BSV blockchain. The base layer BSV blockchain can serve as the underlying ledger for middleware tooling for developers as well as end-user applications for both consumers and enterprises.  Early But Interesting Applications Emerging: BSV has seen businesses across a number of industries including logistics, healthcare, and financials implement applications on its blockchain network. Some examples we discuss in this report include (1) Domineum (Page 19), a company that will push e-government services, cargo tracking, real estate title, and other data transactions to the BSV blockchain, (2) Transmira (Page 20), a location-based XR platform blending AR & VR, (3) Veridat (Page 21), a platform for data integrity, first focusing on data generated by the pharmaceutical industry’s clinical trials, (4) MatterCloud (Page 25), a BSV infrastructure solution for developers to implement payments, transaction storage, and smart contracts, and (5) DotWallet (Page 26), a digital wallet allowing users to access and use BSV and other digital assets, and an infrastructure platform to make it easier for developers to build with the BSV wallet .   Controversial History is a Risk But Crypto Maturing & Maximalism Fading: We recognize that there is a subset of the crypto community that does not have a favorable view of certain BSV supporters and the BSV coin or anyone who associates with it as an extension. We are not here to take a stance on the associated controversy beyond saying that building a community around any crypto network is critical for success, and the extent to which polarization does or does not limit BSV adoption will be key. We are seeing shifting views in the crypto industry where new participants are more open to different tech trade-off’s (i.e. BSC) and communities (i.e. DOGE) and a new wave of retail Robinhood investors who may not know or care as much about BSV’s prior controversies. How this will unfold is a risk to consider.  Bottom Line: We think that BSV is taking a unique technological approach to its network and that people are building real applications on it. Emerging BSV BaaS infrastructure is being constructed to make adopting the blockchain easier. If the community can move beyond its early reputational criticisms and increase adoption, this would bode well for the network’s future.  Key slides from this report... Cover Page (Slide 1)... BSV Blockchain Overview (Slide 3)... Blockchain as a Service (BaaS) (Slide 6)... BSV’s Metanet Empowers Users To Take Control Of Their Data (Slide 12)... BSV’s Existing Application Landscape (Slide 16)... BSV’s Blockchain Scalability to Handle More Data (Slide 29)...

CRYPTO SPECIAL REPORT: IOTA 2.0: Network Upgrade Holds Promise For Adoption & Growth

CLICK HERE for the full copy of this report in PDF format. IOTA (MIOTA) is an alternative Distributed Ledger Technology (DLT) platform, which uses the “Tangle”, a Directed Acyclic Graph (DAG), to enable applications primarily for the Internet of Things (IoT). IOTA is scheduled to undergo a two-part protocol upgrade, IOTA 1.5 (Chrysalis) and IOTA 2.0 (Coordicide) (Slide 2), aimed at implementing a series of major DLT technology advancements to improve network functionality and achieve greater decentralization. If successful, the upgrade could move IOTA towards its longterm goal of becoming adopted as a standard for the IoT industry. Should IOTA be adopted as a standard, it could lead to $700B+ in network economic activity from core IoT markets (Primer Report), which could translate to $280B in token network value (Slide 12). Execution and market acceptance remain key risks to success. • IOTA is moving forward with its technical roadmap and expects critical releases in 2021. Last year, IOTA released the Pollen testnet, which is the first phase of IOTA 2.0 on the network’s path towards full technical decentralization. In the coming weeks, IOTA expects to release the Nectar testnet which the team believes will deliver a scalable, secure, decentralized network architecture without technical tradeoffs. Additionally, IOTA expects to release Phase 2 of Chrysalis (IOTA 1.5) this year which will introduce protocol enhancements that enable smart contract functionality, tokenized assets and stablecoins. These upgrades enhance network functionality and could enable new use cases for consumer and enterprise IoT applications.• IOTA 2.0’s new architecture aims to achieve critical technical milestones. IOTA believes fully serving new open infrastructure applications requires a network that’s open sourced & permissionless, decentralized & securely governed, scalable & lightweight, modular & future proof with fee-less value & data transaction finality in seconds (Slide 10). Many networks offer such features but only with varying combinations and degrees. IOTA 2.0 is being designed with the plan of being the first network to deliver all these DLT features without tradeoffs (Slide 4).• Envisioning an open infrastructure layer for fast and fee-less data-based IoT dApps. The Tangle is being built with the goal of connecting the digital and physical world by providing a data and value trust layer for enterprise IoT applications (Slide 7). This means, if successful, IOTA may emerge as a solution across mobility, supply chain, smart cities, energy grids and industrial IoT.• Focusing efforts on core development modules and enhanced user experience to increase adoption. Last year, IOTA focused development efforts on three core modules they deemed crucial for real-world adoption by their enterprise partners. IOTA Access, Streams, and Identity enable production-ready IoT & supply chain use cases (Slide 8). As a result of these efforts, the IOTA Foundation (IF) has inked numerous enterprise partnership and customer deals ranging from retail e-commerce, smart city infrastructure, healthcare digital identity and other applications. IOTA will soon be releasing the Firefly wallet, which will be the primary gateway for users to access IOTA 2.0 (Slide 9). As designed, Firefly will have a sleek user interface and enable users to access all the network’s new features as they launch.• IOTA 2.0 testnet has shown early but encouraging stats. IOTA 2.0’s early testnet stats offer encouraging glimpses of potential network improvements across security, scalability, and decentralization, that are nearly on par or comparable against peers based on several proxy measures (Slide 11). The IOTA team expects the network stats will continue to see improvement.• What could go wrong? Upgrade may fail, not perform as expected, or not be deemed a major DLT advancement by the market. Attack-vectors or bugs may emerge. Alternative market evaluation models. Failure to gain product/market fit. Competing tech. Bottom line: IOTA’s fee-less architecture offers a differentiated approach for serving data-based IoT dApp use cases. Final technical questions and execution risks remain key, but IOTA 2.0 proposes real tech improvements that may improve IOTA’s adoption and growth. We’ll be watching how IOTA 2.0 module implementations are rolled out over the coming quarters for key signs of product-market fit and technology validation. Key slides from this report... IOTA’s Upgrade Roadmap Aims To Accelerate Adoption & Growth (Slide 2)… Designing The Tangle To Connect Billions Of IoT Devices (Slide 5)… Offering An Open Infrastructure Layer For Enterprise Use Cases (Slide 7)… Gaining A Glimpse At IOTA 2.0 Potential From Testnet Stats (Slide 11)…

  • Deep Research
Dec 2, 2020

CRYPTO SPECIAL REPORT: Horizen Update: ZEN Moving Higher As Halving Approaches

Click Here for the full copy of this report in PDF format. At the beginning of Q4, we released our report Horizen: Web 3.0 Platform Targeting Big Tech Super App Disruption. Horizen (ZEN) is a next-generation internet platform structured as a cryptonetwork that gives users control over their online data with its blockchain cloud computing platform for money, messages, media, and third-party decentralized applications. During the quarter, the ZEN token appreciated 145%, benefited by a 70% gain in Bitcoin, new partnership deals with Horizen and leading crypto companies, and the narrative around Horizen’s network nearing its first Halving Event, which is scheduled for today, Wednesday December 2nd, 2020. Horizen is a fast-growing decentralized cloud app ecosystem aiming to challenge Big Tech. Web 3.0 decentralized internet alternatives like Horizen have the potential to become disruptive over the next decade by solving many issues plaguing Big Tech. Web 3.0 is a vision for a better and more open internet where crypto protocols replace centralized application companies. Horizen offers a smart contract capable and fully customizable decentralized cloud network that allows any developer to build trustless decentralized applications that are not controlled by any organization. Recent partnerships with leading crypto companies showcase Horizen’s technology. In November, Horizen announced their partnership with Celsius, one of the leading “CeFi” (Centralized Finance) crypto credit and loan facilities. Celsius and Horizen will work together to build Celsius its own fully decentralized and privacy-preserving blockchain using Horizen’s zero-knowledge toolkit and Zendoo sidechain interoperability protocol. The proof of concept will be built in its own entirely decentralized environment, and enable the functionality currently available on the platform, including user account creation, a debt registry, linking registered debt to user profiles, and executing state-transition operations such as posting collateral, initiating loans, making payments, and updating status of debt instruments. Additionally, DeFi identity and credit system Sikoba announced their intention to build a customized sidechain on Horizen to safeguard financial data transactions. Integrating Horizen’s sidechain technology, Zendoo, into Sikoba’s platform will allow for an added layer of security and transparency for Sikoba’s users. By layering the two chains and utilizing Zendoo, Sikoba can establish trust that its users’ debts and credits are properly registered. First supply Halving event for Horizen network on Wednesday December 2nd, 2020. In order to incentivize network participants and bootstrap growth of the network, the network issues a block reward of newly minted ZEN every 2.5 minutes awarded to secure and super nodes (20%), miners (60%), and the Horizen DAO Treasury (20%). Similar to Bitcoin, the network has a 21-million-unit cap with a regular four-year halving cycle in which the block reward is cut in half every four years. The network’s first halving will cut the block reward in half from 12.5 ZEN to 6.25 ZEN, representing network annual inflation of ~10% post-Halving. Our analysis of halving events for other cryptonetworks indicates the event could be a positive price catalyst over the coming year if historical trends continue. Crypto returns 1-year after Halving events have averaged 94% which could bode well for Horizen. Among Proof-of-Work (PoW) crypto assets, Bitcoin (Nov. 2012, Jul. 2016, May 2020), Litecoin (Aug 2015, Aug 2019), Bitcoin Cash (Apr. 2020), Bitcoin SV (Apr. 2020), and Zcash (Nov. 2020) have all experienced block halving events. During the current mature market period (i.e. excluding BTC 2012 halving 600% +1yr return), the average return of the crypto assets with at least one year of post-Halving data was 94.2%. If history is any guide, and current demand holds constant, the reduction in new supply may boost the price of ZEN. What could go wrong? Horizen post-Halving returns could be different from the historical returns of other comp crypto assets. Bottom line: Horizen is a new type of internet platform that’s a competitor to watch in the race to replace Big Tech. Recent price performance indicates the market is starting to take notice. Horizen’s progress towards building out its ecosystem and forming partnerships to deliver real world use cases suggest the ZEN token could see increased organic demand in 2021. An increase in demand alongside reduced supply post-Halving could serve as tailwinds for positive performance. High Profile Partnerships Delivering Real World Utility (Slide 2)... Horizen Inflation Rate To Be Halved On December 2nd, 2020 (Slide 3)... Assets Have Exhibited Positive Performance Post-Halving (Slide 4)...

  • Deep Research
Nov 3, 2020

CRYPTO SPECIAL REPORT: Flexa: On a mission to make digital assets universally spendable

Click Here for the full copy of this report in PDF format. Note: This report is an introduction to Flexa and precedes a comprehensive primer.   Flexa: On a mission to make digital assets universally spendableAMP digital collateral token designed to decentralize risk in payment transactions Key slides from this report... Flexa: On a mission to make digital assets universally spendable (Slide 1)... Flexa Company Overview (Slide 2)... Flexa’s payment network facilitates low-cost and fraud resistant payments (Slide 5)...  AMP collateralization: Making Flexa payments fraud resistant (Slide 7)...   Capacity: Flexa’s decentralized application (“dApp”) facilitating AMP staking (Slide 8)... 

  • Deep Research
Oct 22, 2020

CRYPTO SPECIAL REPORT: Zilliqa: Making a competitive play to capture the ASEAN Open Finance Market

For a full copy of this report in PDF format please click this link. Zilliqa Research Pte. LTD. (“the Company”) is the software and services company behind development of the Zilliqa DLT Network. The Singapore-based Company was founded in 2017 and is focused on refining Zilliqa’s DLT technology and deploying the platform with a focus on financial services applications in the ASEAN (“Association of Southeast Asian Nations”) region. Zilliqa (ZIL) is a public Distributed Ledger Technology (“DLT”) platform for decentralized applications (“dApps”). It employs sharding technology to achieve high levels of throughput and maintain low transaction fees. Zilliqa’s DLT offers a differentiated Blockchain-as-a-Service (BaaS) computing infrastructure platform. DLTs like Zilliqa allow businesses to leverage cloud-based solutions to build, deploy and use apps, smart contracts and other blockchain functions without hosting the infrastructure. Zilliqa’s sharded DLT enables high transaction throughput, with historically low fees, and offers a new smart contracting language, Scilla, to make its network safer for deploying enterprise-grade applications. First from Banking to Fintech, and now from Fintech to OpFi, Zilliqa looks focused on the right place. Zilliqa’s DLT is designed to support a range of use cases, but the team is currently laser focused on targeting the biggest one, banking. DLT based financial services, which we refer to collectively as Open Finance (“OpFi”), represent a cost-effective way to reach underserved markets and improve upon current infrastructure, while delivering unimagined financial applications through open APIs and new data access models. Disruption opportunities span payments, remittances, lending, investing, insurance and more. ASEAN OpFi represents a $7.2B revenue opportunity for ecosystems like Zilliqa by 2025 (Slide 34). We estimate that OpFi companies employing DLT in the region could capture 19% share from the digital banking market which represents a meager 2% of the overall ASEAN financial services market. ASEAN’s financial services market is ripe for disruption. Despite being collectively the 5th largest global economy, with rapid economic growth rates and high levels of internet penetration, ASEAN suffers from low levels of financial inclusion, with 75% of the population either unbanked or underbanked. Enterprises within the Zilliqa ecosystem could be worth $3.6B in 2025 by capturing 10% of ASEAN OpFi (Slide 35). Companies in the Zilliqa DLT ecosystem would generate $722M in revenue if our base model input is correct. We estimate the total value of areas where Zilliqa’s DLT can reduce costs to be ~$360M. Of these costs, we estimate enterprises save 50% using DLT, with the remaining $180M paid as fees to the Zilliqa DLT Network and Zilliqa Research. We assume industry net profit margins of 20% and a 25x P/E for our ecosystem valuation. Zilliqa’s DLT network and the ZIL token could be worth $3.9B and $0.22 using our 2025 model assumptions (Slide 37). From an assumed $64B serviceable market using Zilliqa’s DLT, we assume 30% use the ZIL token to facilitate the financial function(s) being served (i.e. using ZIL for payments or as loan collateral) and a 5x model velocity to reach our valuation. We assume 50% or $90M of DLT fees go to network nodes. As RedHat is to Linux, Zilliqa Research is to its DLT, which could earn the Company $118M in revenue and value it at $590M by 2025, should it successfully execute to our base model inputs (Slide 41). If Zilliqa Research can capture 50% of the DLT related fees (25% of savings) through provision of consulting and support services to companies building on its open-sourced network, it would earn the Company $90M in Enterprise Support revenue. The Company could earn an additional $9M in network fees and $19M in block rewards, for a total of $28M in BaaS revenue from its expected 10% Zilliqa DLT node ownership. Valuation assumes 20% profit margins on $118M in revenue with a 25x P/E.    Blockchain accelerator funds drive ecosystem growth. The launch of Zilliqa Capital, a proposed $50M - $200M ecosystem fund, holds the potential to strengthen the platform’s position as a leading regional player in ASEAN and APAC OpFi markets, if successfully launched (Slide 55). What could go wrong? DLT adoption in general could lag, resulting in underperformance. Zilliqa could fail to gain market share against competing DLT platforms with greater traction or alternative features. Failure to reach our assumptions (Slide 42). It’s early to estimate the market size and our approach may prove to be inaccurate as new markets emerge or fail to materialize. The Company may fail to gain product market fit and generate revenue from customers. Crypto is a volatile asset class with the potential for any token network to eventually lose significant value. Bottom line: Successful deployments in 2020 would validate the Company’s go to market strategy and the DLT’s utility in a production environment. We’ll continue looking for signs of increasing fundamental network growth, while keeping an eye on how strategic partnerships evolve over the coming months. Key slides from this report... Zilliqa: Making a competitive play to capture the ASEAN Open Finance Market (Slide 1)... Zilliqa Research could capture ~$120M in revenue by 2025 (Slide 32)... The platform technology stack is reshaping the delivery of banking (Slide 23)...  Zilliqa DLT Network is a platform technology for the Open Finance ecosystem (Slide 25)... Zilliqa DLT Network is a platform technology for the Open Finance ecosystem (Slide 26)... Ecosystem: Network effect and value creation feedback loop design (Slide 15)... Zilliqa Ecosystem Funds: Driving blockchain ecosystem growth (Slide 55)...  

  • Deep Research
Oct 1, 2020

CRYPTO SPECIAL REPORT – Horizen: Web 3.0 Platform Targeting Big Tech Super App Disruption

For a full copy of this report in PDF format, click this link. Horizen (ZEN) (“Horizen”) is a next-generation internet platform structured as a publicly traded Distributed Ledger Technology (“DLT”) cryptonetwork that was launched in Q2 2017. Horizen gives users control over their online data with its blockchain cloud computing platform for money, messages, media, and third-party decentralized applications (“DApps”). Web 3.0 decentralized internet alternatives like Horizen have the potential to become disruptive over the next decade by solving many issues plaguing Big Tech. Horizen’s fintech imbedded emerging internet application ecosystem offers a glimpse at what an early WeChat 2.0 crypto super app platform may resemble. While material DApp, user and revenue growth is key to reaching such long-term prominence, Horizen’s unique advantages and highly undervalued user-base vs. its crypto peers may already imply unicorn potential. Horizen is building a platform for the next era of the web. A blockchain computing network, analogous to a decentralized AWS, comprised of ~40k nodes, the largest among peers, forms the platform’s infrastructure backbone (Slide 53). A smart contract capable open network allows any developer to build trustless DApps that aren’t controlled by any organization (Slide 22). Natively imbedded crypto Decentralized Finance (DeFi) capabilities (Slide 43) enable an ecosystem of interoperable fintech e-commerce DApps, analogous to WeChat mini programs and WeChat Pay (Slide 44). Optional privacy features give users control over their data (Slide 28). Governed as a community-owned-and-controlled cryptonetwork Web 3.0 protocol (Slide 34). Web 3.0 networks offer Big Tech crypto super app disruption potential. As FAAMGs (Facebook, Amazon, Apple, Microsoft, Google) have risen to dominance (Slide 31), cryptonetworks have been rapidly gaining share (Slide 32) and may offer the next wave of innovation and growth (Slide 33). Web 3.0 is a vision for a better internet (Slide 35) where crypto protocols replace application companies (Slide 36). Cryptonetworks further past business model evolutions (Slide 39), trends in computing (Slide 41), and software automation stages (Slide 40), potentially leaving 56% or $530B of FAAMG revenue disruptable (Slide 48). Super app capable crypto platforms are emerging (Slide 45) alongside DApp ecosystems that resemble tech giants (Slide 46). Impressive tech, team, backers, and rapid community growth. Differentiated tech combining ZK SNARK privacy (Slide 57), security enhancements (Slide 54), a highly decentralized network (Slide 69) and a novel sidechain design for scalable, payment interoperable DApps (Slide 56). Team continues to execute (Slide 25). Key investors and partners support Horizen (Slide 64). Community growth CAGR of 75%-170% (Slide 67), 2.3k developers (Slide 70) and 250k monthly active users (MAUs) (Slide 66). Undervalued user-base vs. peers may imply unicorn potential. ZEN is an income generating productive asset (Slide 60), and we believe fee cash flows (ZEN/USD) should drive value long-term, but we see users as a leading metric to watch today. Horizen’s current MAUs are valued in line with Big Tech comps (Slide 74), while forward MAUs may imply a $122M to $440M market cap by 2022 (Slide 75). Valuing Horizen’s user base against crypto peers may imply a market cap of ~$1.8B (Slide 77). Long-term macro and asset specific catalysts unfolding. Big Tech headwinds offer macro catalysts for Web 3.0 (Slide 50), while new DApp launches, partnerships, exchange listings, and the November halvening could drive Horizen higher (Slide 78). What could go wrong? Web 3.0 disruption, market size or winning solutions may not materialize. Horizen DApps, users, and fee revenue may fail to grow. Competing solutions may win. Investors may value Horizen differently. Crypto related risks (Slide 15). Bottom line: Horizen is a new type of internet platform that’s a competitor to watch in the race to replace Big Tech. It offers differentiated tech, a rapidly growing ecosystem and a relatively undervalued user-base, which may create an opportunity. We believe its modest market cap, team culture of execution over hype, and recent transition from a privacy coin to a Web 3.0 network contribute to it being relatively unnoticed, but we see reasons to be bullish on Horizen over the next decade. Key slides from this report… Horizen: Web 3.0 Platform Targeting Big Tech Super App Disruption (Slide 1)... Building platforms for the next era of the web (Slide 34)... Building a crypto tech platform offering a new evolution beyond currency (Slide 20)... Standing apart as the only live privacy focused Web 3.0 cryptonetwork (Slide 21)... Next generation organizational tech business models (Slide 39)... Early innings of crypto tech platforms absorbing Big Tech (Slide 32)... Over 50% of FAAMG revenue or ~$530B could be at risk of crypto disruption (Slide 48)... Community centric culture, new tech and targeted marketing fueling user growth (Slide 67)... MAU growth trend with traditional tech rates may imply ~$125M-450M in value by 2022 (Slide 75)... Horizen would become a new unicorn if its users were priced in line with crypto peers (Slide 77)...

  • Deep Research
Aug 21, 2020

CRYPTO SPECIAL REPORT - Bitwise: Leading Crypto Index Funds & New Alpha Opportunity

For a full copy of this report in PDF format, click this link. Bitwise Asset Management, Inc. (“Bitwise” or “Company”) is a San Francisco-based specialist asset manager founded in 2017. The Company pioneered the first and largest cryptocurrency index fund and is a rising-star provider of liquid, low-cost crypto funds. Bitwise is moving to have its flagship Bitwise 10 Crypto Index Fund and Bitwise Bitcoin Fund publicly tradable. Comparable products have traded at sustained premiums to fund Net Asset Value (NAV) ranging from 40% to 200%, with maximums as high as 2,000%. If listed, we believe Bitwise’s products could justify trading with premiums corresponding to comps, creating a new potential alpha opportunity for funds & accredited investors. This report outlines approaches for capitalizing on such an opportunity (Slide 30). Bitwise’s professional organization resembles The Vanguard of crypto. Bitwise has a strong team (Slide 8) managing a professionalized firm (Slide 3) that’s well capitalized with backing from leading VCs (Slide 9). The Company’s cutting-edge research (Slide 11) has allowed it to pioneer a robust index methodology (Slide 17) and best-in-class smart beta funds (Slide 5). Bitwise has institutional-grade operations (Slide 4), industry-leading service providers (Slide 10) and an ongoing dialogue with top regulators (Slide 6). These factors offer signs that point to industry leadership and should instill investors’ trust in the firm. Funds are attractive passive vehicles for convenient, long-term exposure. Bitwise 10 Crypto Index Fund (Slide 21), Bitwise Bitcoin Fund (Slide 26) and Bitwise Ethereum Fund (Slide 39) offer compelling ways to capture the long-term growth of crypto assets as a category. The funds charge no performance fee and have all in expense ratios below comparable crypto products (Slide 40). We believe low-cost beta products deserve a core place in investors portfolios (Slide 7) and see Bitwise as a leading solution for professionally managed, audited, custodial-insured crypto exposure via a traditional vehicle. Bitwise 10 Crypto Index Fund offers smart beta exposure to large cap crypto winners. Selecting the top performing assets or active fund managers is challenging. Bitwise 10 Crypto Index Fund offers market cap weighted passive exposure to ~80% of the market. A robust rules-based monthly rebalancing methodology provides exposure to large cap assets outperforming Bitcoin (Slide 18) while the index has outperformed the Eurekahedge Crypto Hedge Fund Index by 350% since inception (Slide 16). Publicly listing Bitwise shares would open the door for retail and financial advisors. Investors in the US have limited means for gaining convenient crypto exposure due to structural constraints (Slide 28). Bitwise is pursuing approval to have shares of its Bitwise 10 Crypto Index and Bitwise Bitcoin Fund publicly quoted and tradable in traditional brokerage accounts (Schwab, E*TRADE, etc.) via OTCQX (Slide 42). Shares have potential to trade at NAV premiums corresponding to GBTC and ETHE. Bitwise’s listed funds most comparable products would likely be GBTC & ETHE due to similar structures and ~90% - 100% underlying asset overlap. GBTC & ETHE have NAV premiums that currently sit at 24% and 102%, respectively, while both have sizable market caps and trading volume that evidence real demand (Slide 29). Listed Bitwise funds could trade at corresponding premiums. Multiple Bitwise alpha strategies exist for hedge funds and accredited investors. Investors could capitalize on a possible premium by purchasing Bitwise funds’ shares in a private placement at NAV and selling them on the open market once tradable. We illustrate a range of hypothetical opportunistic, long-term, and crypto-hedged trade scenarios (Slide 31, Slide 32, Slide 33). What could go wrong? Listing approval delays or failure. Lack of secondary market liquidity. Negative or lower than expected NAV premiums. Actual returns may differ from our simplified hypothetical model. Crypto volatility. Hedging basis (Slide 34) Bottom line: Bitwise has an industry leading team and organization. Professionally managed passive products like Bitwise’s have a core place in a portfolio. Bitwise 10 Crypto Index Fund offers a differentiated and attractive solution. Plans to list Bitwise funds create an opportunity for traders and hedge funds. Bitwise funds have NAV premium alpha potential. Key slides from this report... Bitwise: Leading Crypto Index Funds & New Alpha Opportunity (Slide 1)... Offering cutting-edge investable products, indices and research (Slide 5)... Bitwise 10 Crypto Index has outperformed many active crypto hedge funds (Slide 16)... Bitwise 10 Crypto Index captures assets that are outperforming Bitcoin (Slide 18)... Bitwise plans to list its Bitwise 10 Crypto Index & Bitcoin Funds' shares for trading (Slide 28)... Bitwise funds offer an opportunity for investors across several strategies (Slide 30)...

  • Deep Research
Jul 28, 2020

CRYPTO SPECIAL REPORT: BSV - Business Use Cases of the Bitcoin SV Blockchain

For a full copy of this full report in PDF format click this link. Bitcoin SV (BSV): Blockchain gets down for business by solving key challenges and enabling new opportunities. BSV envisions a world where all transactions, digital activity, and data exist on a single public blockchain that functions as a global electronic cash system and a commodity data ledger for enterprise applications. BSV believes that achieving their “Metanet” vision, where data and value interact seamlessly, requires a protocol designed with base layer stability that’s capable of enabling massive scaling. Eleven case studies in this report highlight how companies are deploying business applications leveraging BSV’s unique blockchain tech. Blockchains like BSV are enabling the next evolution of internet businesses. Platforms like BSV offer a solution to many internet issues. They challenge tech monopolies by replacing centralized infrastructure providers with decentralized networks and applications. They solve payment frictions using digital currency to seamlessly enable an internet of value. They reduce global business challenges by re-engineering the trust models underlying internet services using publicly verifiable, immutable, user-owned blockchain data and globally enforceable smart contracts. All these innovations open the door for next gen businesses. Bitcoin SV has a unique vision and differentiated blockchain technology approach. Blockchains come in many shapes and sizes. BSV’s February 2020 Genesis Upgrade laid the technical groundwork for advancing its Metanet vision. Genesis eliminated BSV’s software mandated default block size limit (2GB) and thus allowed for theoretically unbounded scaling. The upgrade also restored certain technical features to the Bitcoin protocol that allow for more complex smart contracting applications and unlock the potential of BSV’s blockchain for use cases beyond payments. BSV’s development team’s efforts remain laser focused on maintaining a platform for enterprise use that is stable, scalable, secure, and allows for safe instant transactions. Unlocking novel applications and enabling internet business model innovations. Companies are using BSV’s immutable data storage, micropayments, and smart contracting capabilities to redesign how value is delivered to customers across a range of industries. Monetization for much of the internet today relies on data intrusive advertising or wasteful bundled subscription models. BSV’s key features could unlock the potential for fundamental internet business model shifts to occur by replacing the current paradigms with new user permissioned data, streaming micropayments, and other unimagined monetization models. Bitcoin SV has a growing ecosystem of 320+ known companies & services. This report examines how nine  companies are using BSV across several industries: Healthcare Records Management, Supply Chain, Big Data & IoT, Casinos & iGaming, eSports, Web Browsing, Advertising API Monetization and Fintech & Investments. It also looks at how BSV’s Research and Development arm, nChain, is partnering with enterprises to help re-engineer their business models through its enterprise blockchain services offerings and how the Blockchain Mining & Transaction Processing Company, TAAL (OTCQX:TAALF; CSE:TAAL), is professionalizing the way blockchain computing services are delivered to make BSV more amenable to enterprises. Network stats are validating BSV’s approach towards enabling high volume, low fee, data intensive applications. BSV’s daily transaction count now regularly surpasses BTC, while its average transaction fees are orders of magnitude lower. These low fees enable micropayments and low-cost data storage applications. Given these low fees, median transaction values on BSV have been able to reach as low 1/100th of 1 cent on certain days. During a stress test, BSV processed the largest block in history on a public network that confirmed 1.3M individual transactions. That translates to a throughput level of ~2,200 transactions per second, thus highlighting BSV’s unique ability to offer high throughput in a production environment. Bottom line: Blockchain has moved from the idea phase to the implementation phase and businesses are now deploying novel applications. BSV’s technical decisions to date have positioned the platform with the scalability needed to service certain high throughput, enterprise applications. Growing PoCs and enterprise traction will offer signs of BSV’s potential. Key slides from this report...  BSV: Business Use Cases of the Bitcoin SV Blockchain (Slide 1)... Development team’s efforts focused on maintaining a platform for enterprise use (Slide 3)... Select companies building on BSV come from a wide range of industry verticals (Slide 9)... Case Study: EHR Data leveraging BSV in healthcare records management (Slide 10)... BSV's lower transaction fees enable micro transaction applications (Slide 23)...

  • Deep Research
Feb 18, 2020

CRYPTO SPECIAL REPORT: Bitcoin SV - Metanet: Beyond digital money, towards an on-chain internet

Bitcoin SV (BSV) completed its “Genesis” protocol update on February 4th, 2020. According to BSV’s team, the successful hard fork implements changes that are primarily designed to 1) enable key technical capabilities that existed in the original Bitcoin protocol (client software version 0.1) and 2) expand the blockchain’s scaling potential. The BSV community believes these changes will restore its protocol implementation back to the original Bitcoin design. BSV stakeholders believe the software modifications will further enable its vision of a “Metanet”, which is a world where transactions, data and digital activity of all types can be on a single blockchain, just like the world operates online on a single internet. We view the Genesis protocol changes as positive steps towards building a Metanet that may position BSV for greater adoption, while also noting that it may take time before the design’s ultimate viability is fully proven out.  Bitcoin Core focused on financial transactions, Ethereum built a world computer, Bitcoin SV envisions a Metanet for both. The Metanet seeks to expand Bitcoin SV’s use cases beyond payments to advance an improved internet where value and data interact seamlessly. Genesis further enables nChain’s vision by enhancing BSV’s technical capabilities to allow for more complex smart contracting applications. The update restored programming language functions that were enabled in Bitcoin’s earlier design, but were later removed in the Bitcoin Core protocol, which drove developers to build Ethereum. Blockchain scaling takes different strokes for different folks and BSV’s unlimited block cap may allow the most. The BSV community believes their blockchain must offer unbounded scalability in order to achieve the Metanet vision. Genesis eliminates the 2GB software mandated default block cap and lets miners individually set any block size to achieve this goal. This allows for theoretically unbounded BSV scaling, while competitors like BTC, BCH and ETH are currently capped at around 7, 115 and 15 TPS, respectively. However, we believe miners will likely continue to impose caps which may limit scaling in practice. Nevertheless, the approach gives the network added flexibility, which may offer a valuable competitive advantage in the long run. Maxthon blockchain internet browser development and ecosystem growth offer encouraging signs. The global software company, Maxthon will be building the first BSV-powered blockchain internet browser that aims to provide fast and easy ways to search and view on-chain data and content. Additionally, ~400 projects are building applications for consumer reviews, social media, online games, identity monetization and consumer data on the BSV blockchain according to Bitcoin Association data. Network data suggests the BSV blockchain is already being used for data storage. BSV’s larger block size has enabled large and increasing daily transaction counts while maintaining relatively low fees compared to BTC and BCH. The data indicates BSV is already being used for data storage. We view this as an early indicator that BSV’s blockchain may be capable of acting as a universal server for hosting large amounts of website, user and other data on-chain. What could go wrong? More complex functionality may increase code vulnerability risks. Alternatively, developers may prefer building on a non-script code base that they feel allows for even more complex, Turing complete applications. Hardware requirements for scaling via bigger blocks may alienate non-enterprise users, which may hurt decentralization and reduce censorship resistance (tradeoffs BSV is intentionally accepting). High transaction counts may not materialize into high transaction value or economic value to the network or its miners.  Bottom line: It’s still early days for cryptocurrency technology and there is little certainty around what the winning implementation will be. The BSV community is taking steps to position BSV as a scalable and robust platform with a focus on growing network adoption.  Metanet: Beyond digital money, towards an on-chain internet (Slide 1)... Genesis hard fork on February 4th, 2020 enables key Metanet functionality (Slide 3)... BSV on-chain activity reflecting data transactions (Slide 5)...

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