Delphi Office Hours Call (April 27th, 2022)

Below is the full recording and transcript of the Office Hours call our team did on Wednesday, April 27th, 2022.

• Markets (01:33)
• NFTs (05:24)
• Tokemak (09:51)
• Bridges (16:01)
• L1 (19:09)
• Flash Debate (22:54)
• Q&A (30:20)

Transcript

00:38 • Nick
GM, everybody. Welcome to Delphi Pro’s Office Hours. The date is April 27th, 2022, and we’ve got quite a lineup ready for you. Today, we’re going to dive into a general market update. We’re going to talk about our new web series and upcoming NFT insights with Teng. We’re going to dive into a highly requested update on Tokemak, upcoming research around bridges, and an excellent soon to be released piece about L1s. Of course, we’ll get to Q&A at the end. We’ve got a lot of questions ready to go. Thanks for sending those ahead of time. As always, you can put those questions in the chat that come in on the fly, and we’ll try our best to get to them towards the end. With that, I think we’re going to turn things over to Kevin to talk about the latest in markets. 

01:37 • Kevin
Thanks, Nick. This is one of those weeks where I feel like it may come off like we’re beating a bit of a dead horse here, but I think there’s a very good reason for this. One of the key trends we’ve been watching for several months now, and we’ve been talking about and highlighting in our research, is the potential risk of not only a stronger dollar, but a rapidly rising dollar. In our latest Market Insights from last week, we touched on this a bit. The chart that you’re seeing here basically shows the inverse of the dollar index versus the ISM manufacturing PMI, which is, more broadly, a decent proxy for the U.S. business cycle and the U.S. economy at large. It’s not necessarily sending major warning signs right now, but this common theme of inflation starting to eat into consumer spending, and that also starting to put pressure on economic growth, and the market starting to wake up and recognize that this recovery coming out of the aftermath of COVID was more fickle or fragile than a lot of people initially realized; we’re starting to actually see all of those trends manifest in a stronger dollar. 

02:46 • Kevin
In this chart we put out on Thursday, and as of this morning, the DXY was approaching 103 which is a significant technical level that if it breaks out from, could see even higher dollar pressure. Why a strengthening dollar matters is because oftentimes it’s one a risk authenticator. Oftentimes it can also lead to spillover effects in other markets and asset classes because you tend to see things like dollar shortages can create liquidity crises in other markets. If you go to this next chart, this also plays into this theme around no real kind of safe haven right now. If you look at long dated U.S. treasury, for example, they’re on pace for one of their worst years in decades, so far year to date. This chart that we highlighted last week just shows that the actual net change in basis points for the U.S. ten-year treasury yield year to date compared to the last 30 years. 

03:46 • Kevin
What you can see is that this is one of the highest basis point rises we’ve seen to this point in the calendar year. Bringing this back full circle to the dollar, the read through there is you when have stocks falling, bonds falling, and portfolios generally losing significant value, it does start to creep into not just consumer expectations, but also investor reactions. The idea that you would move to cash or you would move and seek out safe havens like the dollar if you’re a foreign investor is something that can potentially exacerbate this upward pressure that we’re seeing on the dollar, which can only lead to this circular effect where it starts to create more risk off attitudes, a more risk-off environment, potentially leading to a rising risk of liquidity crises and so on and so forth. 

04:35 • Kevin
We are at a bit of a delicate point here. For those who say that crypto is not affected or shouldn’t be impacted by the macro landscape, over a longer time periods maybe you can make that argument, but if you’re looking for a reason for why Bitcoin and the rest of the crypto market is trading the way it is – if you look at these big macro indicators, the writing really is on the wall. For us, what we’re looking for is, again, monitoring the dollar, continuing to do that, and putting out research on it. I do think, as we’ve been saying for weeks now, the short to medium term outlook is still a bit bearish to conservatively neutral at best, just because I don’t think we’ve seen all of this fully play itself out. 

05:18 • Nick
Wonderful. Very helpful color there, Kevin. I definitely recommend checking out our latest Market’s Note. Shifting gears, we have Teng on the line to talk about NFT Insights, but it’s worth noting that we just released a brand-new web series, featuring Teng and another Delphi member. Teng, can you talk about what this web series was like and what you ended up doing with the cash? 

05:48 • Teng
Yeah, for sure. I just wanted to take like a minute to plug this new YouTube series that Delphi Media is producing. It’s called the NFT Collector. We just released our first episode this week. In this first episode, I pit myself against one of our other NFT gurus, CoalieBee. Our challenge in this episode was to put together an NFT collection within a budget of $50,000. Within this episode, it’s about 10 minutes long, we talk about our favorite collections and why we like them. I’m not going to give anything too much away here, but it was a very fun episode to do. I would really love for you to take a look when you have some time. I also just wanted to highlight that this is just the beginning of an amazing series that we’re putting together on NFTs. We’re going to be getting together many of your favorite NFT heavyweights / influencers to come on the show, talk about their favorite NFTs, and debate various issues. 

06:51 • Teng
Our second episode is already in the works. Feel free to subscribe and share with all your friends. It’s free for everyone to have a look. I’m excited about this series and would love for you to catch that. The other thing I just wanted to highlight for this week and which I’ll also talk about in the NFT Insights that’s dropping today is the Yuga Labs land sale which is for their metaverse called the Other Side. This is happening this Saturday, and it’s gearing up to be potentially one of the largest NFT sales in history, with some people estimating it to hit up to a nine-figure sale amount. Even though it’s just a few days away