Bitcoin has no role in institutional or retail investors portfolios. It is not a currency: not an unit of account, not a scalable means of payment & is a highly volatile store of value. It is heavily manipulated: look at the investigation of  Bitfinex by US law enforcement. 1/n

0/ Predictions for 2021:
(This is not investment advice, or any other type of advice. DYOR)

1/ #ETH hits new ATH(s).

2/ #Bitcoin breaks $55K; but BTC YE2021 close is < $30K.
wins!

3/ > 3 billion-dollar crypto IPOs successfully occur (eg CoinBase, BlockFi, et al).

4/ @SBF_Alameda’s ‘off-chain BTC folding’ strategy goes unnoticed; whole crypto ecosystem wins!

1/ crypto VC is going through an explosive 🧨 phase

there are big funds (>$500M AUM), a lot of small funds (<$50M AUM), and *tons* of prop firms + angels

i’ve done 15 deals in the last 3 months as an angel + small fund @CoinSharesCo VC.

observations + implications... 👇🏾

2/ the big firms need to deploy in size - $5M checks and up

a $250M fund could do a $5-10M deal every month for two years and still be under-allocated

and there aren’t enough companies raising series B / C / D rounds!!!

every deal i’ve done lately is under $50M valuation

3/ so we see firms competing to take down entire rounds.

a recent series A financing had two firms competing to take down the ENTIRE ROUND, and it eventually got upsized, a LOT.

if a company is putting up user acquisition / growth and a revenue story, it’s highly competitive

4/ most projects and co’s don’t need money tho - why would a founder take 20-40% dilution when they’re banking cash and crypto? so they do 5-10%

so the valuations go up, but available allocations go down, resulting in an even bigger squeeze on allocators who *need* to deploy

5/ add in the onslaught of non-crypto M&A that’s coming, which is culling the herd of investable unicorns

add in the wave of SPACs and direct listings taking later stage opportunities out

there just aren’t enough places to put capital in size rn

what’s a fund to do?

stacks are eating the world

business used to be easiest to comprehend via a) market-based logic of horizontal vs. vertical STRUCTURE, b) professionalization/specialization based FUNCTION c) core competencies based BEHAVIORS

this has pretty much collapsed in the last decade

Structure = sclerosis
Functional specialization = bureaucracy
competencies = inertial habits

"Stack" thinking instead lets technology structure (rather than market structure) drive business org logic

Companies seem to do well when they identify an entire stack of technologies they are good at (not just point bits) and organize to conform to its logic. There is a "full-stack" dimension of technical specialization that is the spine of the org

It feels buzzwordy, but it really is getting to be that way. AI stack, decarbonization stack, mobility stack, electrification stack... some end-to-end pathway of turning physics into economics via layers of tech artistically baked together like a cake

If you've been following DeFi or Ethereum over the past few months, you've likely heard the term "flash loan" mentioned again and again.

This new DeFi primitive has been at the core of a number of economic exploits and arbitrages.

A thread on the basics of flash loans - 👇

Most DeFi loans take place across days, weeks, or even months.

You can deposit Ethereum into Aave, then withdraw stablecoins for yield farming in Yearn, for instance.

On-chain loans have garnered much traction, with total debt outstanding moving toward $2.5 billion.

While popular, DeFi loans are not capital efficient: to account for custodial risk and volatility risk, you need to put up 130-150% of the value of your loan in collateral.

If your collateral slips below the threshold, you're liquidated, resulting in a fee anywhere from 5-13%.

Flash loans are much different than longer-term DeFi loans.

Flash loans are non-custodial, take place over the course of one block, and require no collateralization.

That's to say, the coins you borrow never appear in your wallet.

When taking a flash loan, you can direct the coins to any protocol and function, as long as you pay back the loan + interest fee within the same transaction.

So what the hell? What are flash loans used for?

More often than not, arbitrage.