USDT Depegs, ATEM Car Club, & ETH Earnings

MAY 12, 2022 • 8 Min Read

Joo Kian + 2 others

Disclosure: Delphi Ventures and members of our team have invested in Altered State Machine (ASM), and hold USDT, USDC, SOL, NEAR, MATIC, AVAX, LUNA, UST, and CRV. These statements are intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.

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Chart of The Day: USDT Depegs Briefly

  • USDT and USDC are the top two collateralized stablecoins by Tether and Circle.
  • During Asia hours today, USDT saw a depeg from $1 to $0.945 at its lowest point on FTX. This did not last long and has since repegged back at $1. USDT was being sold off and USDC was being bought, causing the USDC to rise to a peak of $1.06. USDC/USDT was trading at ~1.1 at the peak of the depeg.
  • Institutions were taking advantage of this and arbitraging USDT as its redemptions were still being honored at a 1:1 ratio. This would have been a fairly risk-free trade for institutions, earning them 5.5% considering USDT’s lowest price today.
  • Curve’s 3Pool took a hit as its pool weightage started skewing heavily towards USDT as users sold off their USDT for USDC or DAI. This led to the pool skewing towards USDT, holding ~89% weightage of the 3pool.
  • Why did USDT take a hit and not USDC? On the surface level, USDT and USDC might look the same, but their risk profiles are vastly different. USDC is 100% backed by cash and short-term U.S. Government debt, ensuring that 1 USDC is always backed by 1 USD. USDT, on the other hand, has ~36% in commercial papers, a form of unsecured debt, that has a higher risk profile. This means that if those commercial papers default, USDT is likely to be undercollateralized and backed by less than 1 USD. This could be a potential attack point if redemption of USDT completely drains their liquid cash and T-bills part of their reserves as Tether will be forced to liquidate their commercial papers (whether at a profit/loss) to cover redemptions.
  • For more on the recent stablecoin turbulence, Delphi members can see our Flash Update on macro and UST here.

The Azuki Debacle, ATEM Car Club Launching & Upcoming Mints

[Excerpt from May. 11th NFT Insights]

  • Google searches for ‘NFT’ experienced a significant spike in January but have since fallen back down, with no signs of a new uptrend yet. In comparison, the search interest for ‘Bitcoin’ has been relatively stable since mid-2021. We monitor Google search trends as an indicator of mainstream interest in crypto and NFTs. Note that the data indicates relative search interest over time, so the search interest between ‘Bitcoin’ and ‘NFT’ is not directly comparable.

Weekly Highlight — ATEM Car Club

ATEM Car Club is the next major project in the Altered State Machine (ASM)-FLUF ecosystem, founded by Jeffrey McDonald who is the brother of David & Aaron McDonald (founders of ASM and FLUF, respectively). All of them are car enthusiasts. With ATEM, they are seeking to push the boundaries of car culture and merge real-world and digital experiences, creating a professional car club living in the digital sphere. The project has been in development for over 7 months now and will be launching its inaugural collection of Membership Cards on 14 May. ATEM appeals to a niche group of car and racing enthusiasts, unlike PFPs, which have a broader audience.

  • There are 2 main components to the Membership Card:
    • Access to member benefits in the ATEM car club. This includes access to IRL & virtual events, the acquisition of real historical cars owned by the car club and made accessible to members, and community partnerships.
    • Ability to mint one or more genesis cars that can be utilized in the Burndown racing game.
  • There will be several different rarity tiers and traits to the membership cards, which will be randomized and revealed only after the mint. The team has been building up the suspense by deliberately being light on details but has mentioned that the different traits may be tied to various utilities. For example, it could tie into the type of genesis cars that each card can mint and the car’s strengths and weaknesses.
  • ATEM car club members will be able to claim a genesis ATEM vehicle that can be used in the upcoming car game, Burndown. Burndown is a game in development that is centered around collecting, tuning, and racing cars piloted by AI drivers. The AI component of the game leverages ASM brains, similar to AIFA (a football game also powered by ASM brains). In the future, players will be able to train their ASM brains to navigate the various racing circuits. In the game, players manage their stable of cars and pick upgrades & combinations but the cars will be piloted by an AI driver. The game is being developed in Unreal Engine 5.

  • Mint details. This mint is unique because the sale is conducted entirely in $ASTO (Altered State Machine token) only and not in ETH.
  • The total collection size is 12,455 — of which 10,000 will be available for minting (1,455 are reserved for an unspecified airdrop and 1,000 for a special partnership).
  • ASM brain owners will have 4 hours to mint their membership cards (1 card per brain) before the public sale. This is not a free claim but costs 2384 $ASTO each. After that time window, the sale will be open to the public at the same price, until sold out. There is a maximum supply of 10,000 ASM brains however, only ~8,900 are active at the moment (the rest of the brains are in unopened ASM boxes).

Some thoughts on ATEM Car Club:

  • I did a quick analysis of ASM brain owners (2081 unique wallets) and their $ASTO holdings. Only ~320 wallets have enough $ASTO required to mint a card. This suggests that will likely be a good number of cards available for public sale — my guestimate would be at least 2,000 – 3,000.
  • Let’s consider the demand drivers for this mint:
    • On the positive side,  there will be demand from members in the ASM-FLUF ecosystem who have been anticipating this mint for a while. All of these metaverses/collections are intertwined and the founders are closely related. ASM members will be keen to support another compelling use case for the ASM brains.
    • On the flip side, the market downturn this week will dampen demand. Also, the mint price is relatively high, translating to about 0.28E at current prices.
  • It will be interesting to think about the possible effects of the mint on $ASTO:
    • If fully minted out, this would remove 23.84M $ASTO from circulation and put it in the hands of the ATEM team. This is a significant portion of the total circulating supply of $ASTO (about 1/4), considering there is only approximately 90 – 100M $ASTO currently circulating.
    • If the belief is that there is enough demand to mint out fully, we could look to ApeCoin ($APE)’s price movements during the recent Otherside land sale as a possible reference. The $APE token price rose significantly in the days leading up to the mint as buyers accumulated, started dropping in the hours just before the mint as speculators sold, and continued on its downward trend after the mint.
  • There are several layers to the game, and the release of those layers will be a progressive activity for the community to participate in. Expect that it will be some time before you can use the ASM brains in the game.
  • For more, Delphi members can see the full NFT Insights here.

Valuing Layer 1s – Memes, Money, or More?

[Excerpt from a Delphi Pro Report]

  • Ethereum has firmly led the pack in P/S, except for a brief period where Fantom activity spiked. BNB Chain and Fantom have otherwise come next, though at respectable levels compared to most others. The other notable contender here is Avalanche, chugging along capturing more and more revenue lately.  
  • P/S is a helpful barometer of real demand today, but reading too much into this in isolation would provide a very incomplete picture. Growth is the other half. For example, Fantom and BNB Chain can trade at “cheap” multiples because they currently lack innovative catalysts relative to other chains here. AVAX trades higher because they have stronger growth prospects in our view, and so on. These multiples aren’t to be religiously adhered to and compared as they are in tradfi, but they’re helpful in forming a picture. 
  • For more, Delphi members can see the full Delphi Report here.

Notable Tweets

USDT Redemptions

Value of MEV Strategies

Bancor 3

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Joo Kian + 2 others