A broad market update from 8DC from July 2022. A view on Why Crypto? The case for Bitcoin and Ethereum. DeFi as the first proper use case for crypto. And why now is the time to invest.

1. 20 July 2022
8DC Market Update

2. Why Crypto? Why are we here?

3. There are lots of reasons to ❤ Crypto
peer-to-peer payments network
better financial rails
web3
Creator Economy
Censorship Resistant
Decentralized Technology
Digital Gold
Future of Finance Global Reserve Currency Digital Scarcity
Trustless System
The World’s Computer
Internet of Money
NGU Technology
Swiss Bank Account in your pocket

4. We Live in a World of Databases
Social Media
Bank
Account
Home Title
Uber
Medical
Records
Inefficient
Rent Seeking
Permissioned
Misaligned Interests
Thousands of DBs Organize Our Lives Thousands of TTPs Control Your Life

5. Blockchains > Databases*
*NOT Always….
Blockchains, powered by crypto tokens, are a new tool to organize
networks without having to trust an intermediary.

6. Crypto ≈ Internet Circa ‘97 But Growing Faster
Source: https://twitter.com/RaoulGMI/status/1502638102002782213?s=20&t=hWZj8OBpKwUuZ2Pan3W64g

7. 8DC Foundation + Frontier Fund: A Balanced
Exposure to Crypto
NextGen Infrastructure
Crypto is still so new, there are still vast
greenfield opportunities. From L1s and
scalable L2s, to GameFi, NFT and DeFi
Infrastructure.
2
Bluechips
The foundational aspect of a crypto
portfolio: BTC and ETH. This includes
custody, security, and yield via staking.
1
Early Stage
Opportunistic pre-public launched
projects. We will deploy a smaller amount
of capital to these opportunities as well as
early stage recently launched tokens.
4
DeFi Advanced
DeFi is the first crypto application with
product market fit. DeFi Infrastructure is
here to stay, and opportunities for yield
generation abound.
3

8. A Look at Bitcoin. Why now?

9. Bitcoin: As Good as Gold (and Better)
Source: https://companiesmarketcap.com/gold/marketcap
27.5x

10. MV (Market Value) - Market Cap.
Coins in circulation multiplied by
current price.
RV (Realized Value) -
Approximates the value paid for all
coins in existence.
Buy Bitcoin at 1.0 MVRV
~$200
~$3,500 ~$5,000
~$20,000
Source: https://charts.woobull.com/bitcoin-mvrv-ratio/

11. Log Growth Curve in Buy Zone
Source: https://www.davthewave.com/post/a-review-of-the-long-term-lgc-theory
~$200
~$3,500 ~$5,000
~$20,000

12. We Like Bitcoin, We Love
Ethereum

13. Ethereum - The World’s Computer
Source: https://www.theblockresearch.com/mapping-out-ethereums-defi-15376, https://www.antler.co/blog/creatoreconomy2022
Ethereum Virtual Machine (EVM)
Blockchain Smart Contracts Consensus
Crypto Web3

14. Ethereum - The Largest Developer Ecosystem
Source: https://medium.com/electric-capital/electric-capital-developer-report-2021-f37874efea6d
Source: https://twitter.com/fredwilson/status/1345878353832767489

15. Ethereum dominates Fees Revenue compared
with other Blockchains
Ethereum - Highest Revenue Blockchain
Source: https://cryptofees.info/, https://tokenterminal.com/terminal/metrics/protocol-revenue
~85% of Total Revenue accrues to ETH Token Holders

16. Ethereum - (Post-Merge) First Profitable Blockchain
Source: https://medium.com/@halp1120/1-the-only-other-large-assets-that-arguably-have-structural-demand-are-luna-and-bnb-cdcf8b2a8281
Ethereum's product is Blockspace.
It sells that blockspace for fees.
$25M is the average daily fee
revenue over the past year.
Ethereum has to issue tokens to
incentivize miners to secure the
network. Currently under PoW
~13K ETH need to be issued
daily to secure the network.
In transitioning to Proof of Stake,
much less ETH is required to
incentivize validators to stake
ETH while maintaining or
improving security.
This shift in issuance should
result in Ethereum being the first
profitable blockchain.

17. Ethereum - (Post-Merge) Supply & Demand Shifts
Source: https://medium.com/@halp1120/1-the-only-other-large-assets-that-arguably-have-structural-demand-are-luna-and-bnb-cdcf8b2a8281
Miners expenses are denominated in fiat,
so they have to sell 80-90% of their fee
revenue to operate their business.
Since Aug. 2021 with EIP-1559
Ethereum burns ~70% of
transaction fees. This
decreases float and indirectly
increases buy pressure.
Not only is much less ETH
required to incentivize stakers,
stakers have almost negligible
costs meaning they’re not required
to sell ETH.
This change in consensus
mechanism should result in a shift
from $16M of daily net sell
pressure, to $16M of daily net buy
pressure.

18. The Future will be Multichain
Other L1s will differentiate and
accrue value
L2s are the skyscrapers that
help scale an individual city
Cross-chain bridges and
interoperability will be crucial
Blockchains are Cities
Source: https://medium.com/dragonfly-research/blockchains-are-cities-564327013f86

19. Beyond the Tip of the Iceberg

20. Why DeFi?

21. ● Laws were written in the 1930s
● Code written in the 70s and 80s (SWIFT, etc).
● International money transfer costs 8-10%
● Bonds settle T+2, Equities settle T+3,
Distressed Bank Loans settle T+20
● SpaceX has lowered the cost of launching a
rocket by 100x, but we’re still paying $3 to take
cash out of an ATM
Source: https://capitalallocators.com/podcast/opportunities-in-defi/
If we started Finance today from a blank slate, would
it look the same?

22. TradFi vs DeFi
Source: https://capitalallocators.com/podcast/opportunities-in-defi/
Intermediated
Done through banks, broker/dealers,
custodians, etc.
Dis-Intermediated
Instead of TTPs, software code is
executing “finance” for you.
Permissioned
Only accessible if you have an account.
Not everyone can access them.
Permissionless
Anyone with the internet can use and
access.
Opaque
Counterparty risk, systemic risk, etc. You
can’t see the risk you are taking.
Open & Transparent
You can see every transaction on the
blockchain. Every trade, loan, repayment.
Country Specific
Citizens of wealthier countries have
access to better financial products.
Global
First ever truly global financial products.
More inclusive, more liquid and efficient.

23. Source: https://ark-invest.com/big-ideas-2022/
Crypto-Powered Finance Might Scale More Efficiently
Than Traditional Finance

24. Rent Seeking vs Programmable
Source: https://companiesmarketcap.com/gold/marketcap
20%
Of US GDP is comprised
of Financial Sector
100 Employees
$1.1T in Trading Volume

25. DeFi: The First Crypto Application with
~Product/Market Fit
Source:https://defillama.com/, https://coinshares.com/research/defi-spotlight-quarterly
DeFi Has Exploded in the Last 2-3 Years TVL in ETH has remained relatively constant

26. Maple Finance: A Case Study in Cash Flows

27. A Generational Investment
Opportunity

28. Ark Invest: Bitcoin Price Could Exceed $1 Million by 2030
Source:https://ark-invest.com/big-ideas-2022/

29. Ark Invest: Ethereum (powering DeFi) Could Exceed $20T
Market Cap in Next 10 Years
Source:https://ark-invest.com/big-ideas-2022/

30. Crypto Marches Forward; Prices a Gift from the Past
Asset Jan ‘21 Progress Jul ‘22
Bitcoin ~$30K ● Bitcoin settled $13T in 2021 > Visa Payments
● Taproot Software Upgrade
● El Salvador adopts Bitcoin as legal tender
● Institutions: Tesla, Square, Twitter, MicroStrategy
~$20K
Ethereum ~$1K ● DeFi launches and reaches $250B TVL
● Stablecoin MC hits $1B
● EIP-1559; Proof of Stake Imminent
● DAOs: Treasuries up 40x, Users up 130x
~$1K
Total Market Cap ~$1T ● Global Crypto users grew +178% to ~300M
● 34K New Developers; Highest Year in History
● NFTs; OpenSea Trading Volume $14B in 2021
● L1s offering higher transactions & lower fees
~$1T