Soros acknowledges Crypto holdings & TikTok embraces NFTs

Hartmann Capital Newsletter, Monday October 11th, 2021

In this issue

  • Another billionaire fund manager reveals cryptocurrency holdings

  • TikTok further mainstreaming crypto

  • Fantom challenges for top EVM “Eth killer” in the multi-chain world

  • This week’s blog: Views from Messari Mainnet, Part II

Market by Numbers

A big week for Bitcoin was likely caused by rumors of an ETF, as we reported last week. BTC is back above 1 trillion in market cap. It was generally an up week for cryptoassets. Soaring energy prices may signal the return of inflation fears.

Another billionaire fund manager reveals cryptocurrency holdings

Soros Fund CEO/CIO Dawn Fitzpatrick, when interviewed by Bloomberg earlier this week revealed that the billionaire fund manager’s family office owns crypto. 

The growing user base and the use cases dominated any inflation theme. She stated;

Bitcoin is not just an inflation hedge. It’s crossed the chasm into mainstream… We own some coins, not a lot, but the coins themselves are less interesting than the use cases of DeFi and things like that.

Reading between the lines, “some coins” and “DeFi” likely points to investments in more than just Bitcoin. In this, Soros would be one of the first to go beyond Bitcoin in their investment thesis.

TikTok moving further into crypto, on layer 2 Ethereum

P2E is mainstreaming non-crypto natives into crypto at a furious pace. But social media is also embracing crypto. Though many Web2 platforms are beginning to incorporate crypto – in Twitter’s case, for payments – TikTok has been pushing the hardest. 

In August it announced a partnership with Web3 music streaming protocol Audius, whereby TikTok will make artists’ songs seamlessly available for users to include in their short videos. Web3/DWeb has the potential to disintermediate artists and their fans, which could benefit all artists but give a major boost to unsigned creators who earn almost nothing from centralized platforms such as Spotify.

This week, TikTok ventured further into crypto space by launching a marketplace for NFTs based on TikTok Top Moments: Clips from six famous creators including Lil Nas X and Grimes.

In another example of NFTs transcending into the real world, the NFTs will be featured at the Museum of the Moving Image in New York as “Infinite Duets: Co-Creating on TikTok,” throughout October.

TikTok chose ZK Rollup Immutable X, the first layer 2 Ethereum scaling solution for NFTs, also used as the platform for P2E crypto game Gods Unchained. Immutable X uses StarkWare for instant confirmations, thousands of transactions per second and almost zero-cost trading.

NFTs are invading Web2, and on Ethereum.

Fantom challenges for top EVM “Eth killer” in the multi-chain world

One of our top themes for 2021 is that there will be winners and losers in what will be an increasingly multi-chan world. The difficulty in scaling Ethereum (leading to high transaction costs and lagged execution) and the late arrival of scaling solutions has opened the door to layer 1 blockchains that have higher throughout at much lower cost.

While Terra and Solana are Hartmann Capital favorites, we are well aware that there will be other layer 1 blockchain alternatives. Those without unique ecosystems are locked in an incentive war to gain value locked and the resultant network effects, and there have been some strange occurrences. Certainly. Incentives have driven alternative layer 1 adoption. Polygon was the first to use incentives to motivate bridgers from Ethereum, but that TVL was acquired when there were no serious competitors. Avalanche, Fantom and Arbitrum (layer 2) all made big gains on the back of incentives.

Fantom, however, still has momentum: It was one of the big winners last week, with both value locked on the chain and the native token price skyrocketing.

Like with Arbitrum in September, an extremely high-yielding money market protocol, in this case Geist Finance, attracted billions in deposits in short order. The quickest to bridge to Fantom were able to 10x their money. 

Other layer 1s also did well this week, even if Fantom outperformed. Now are these trends sustainable?

If Arbitrum is a fair parallel, then the answer is a qualified maybe. While the all-time-high TVL on Arbitrum did fall quickly, it never fell below its original levels.

While the Geist hype is also likely over, there are signs that Fantom may stay competitive. Yearn darling and one of the most respected devs in crypto Andre Cronje has always supported Fantom, and announced this week that Yearn and Iron Bank are now available in beta. 

While many dApps have migrated to many chains over time, including Sushi Swap, Curve and Anyswap, Yearn – along with Compound and MakerDAO – remained one of the few to stick with Ethereum layer 1. Challenger layer 1s need competitive advantages. Yearn may be one of those, even after the Geist hype is done.

In any event, Fantom has upped the ante for other challengers, whether it be Avalanche and Polygon, the winners to date, or the potential late bloomers that include Harmony, Celo, and Algorand.

Picking winners at this point may seem impossible, but the spoils will go to the winners. A multi-chain world might not be an every-chain world.

This Week’s Blog: Views from Messari Mainnet, Part II

This week’s blog continues to investigate the crypto investment themes we identified at Messari’s Mainnet conference in September. Last week we focused on the regulatory environment and explained how our conviction on multi-chain ecosystems was supported in New York City. This week we cover:

4. The Decentralized Web (dWeb) is here

5. The rise of crypto gaming and play-to-earn

6. Institutions will re-centralize DeFi

Hartmann Capital Weekly written by Head of Communications, Rasheed Saleuddin, PhD, CFA


Disclaimers:

This is not an offering. This is not financial advice. Always do your own research.

Our discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.