Funding Frenzy, BTC Breakout, & AAVE-BAL Collab

MAR 30, 2022 • 6 Min Read

Joo Kian + 4 others

DISCLOSURE: DELPHI VENTURES HAS INVESTED IN BTC, LUNA, COWSWAP, RUNE. DELPHI HAS ALSO DONE CONSULTING WORK FOR AAVE IN THE PAST. MEMBERS OF OUR TEAM ALSO OWN AAVE AND BAL. 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: More Funding Even in Market Uncertainty
  • Crypto VC funds are hungry for deals even in the face of market uncertainty. February 2022 saw the largest number of project fundings to date, with a total of 182.
  • Investments categorized as Web3 were the most popular, taking the majority of February’s investments. Infrastructure investments seem to be gaining traction in March, when it spiked to 36 raises, the largest number of investments it has seen in a year.
  • In the year so far, the largest raises were by Citadel Securities, Luna Foundation Guard, and Fireblock, which raised $1.15B, $1B, and $550M, respectively.
  • Crypto is also seeing one of the largest weekly inflows of funds in 2022 at $193M over the past week. The main inflows were directed towards BTC and Solana, which represented $97.8M and $87.1M, respectively.
  • Note: The data for “Mar-22” is only updated till March 24th, 2022, and does not include data for the remaining days of March 2022.

Flash Update – Bitcoin Breakout Sparks New Hope
[Excerpt from our Mar. 28 Flash Update]
Breakout Watch

  • The crypto market is back in the limelight as Bitcoin’s price jumped to its highest level of 2022, breaking through key resistance levels along the way. We’ve been waiting for BTC to break through the $46-48K range, for example, before sounding the alarms of a potential trend reversal. The low-end of that range is where Bitcoin’s price started the year, while the high-end marks the anchored VWAP since BTC’s all-time high.
  • Bitcoin’s recent price strength pushed its 14-day RSI above 70 for first time in over five months. Historical precedent favors the bulls here as average forward returns over the subsequent 30-90 days tend to be largely positive.
Price Trends & Key Levels to Watch

  • “Bitcoin’s price has consolidated over the last several weeks with BTC putting in a series of higher lows and lower highs. The short-term MA grouping appears to be edging towards a positive slope, and is once again trying to break through the entire long-term MA grouping… If we see a bullish crossover and a trend reversal in the long-term grouping… that would be a very encouraging sign for BTC.”Market Insights – Ripping Off The Rate Hike Band-Aid (03.17.22)
  • In the two weeks since we published this report, the Guppy Multiple Moving Average (GMMA) analysis for BTC has completed a full crossover between the short-term MA grouping (blue) and long-term MA grouping (red). The slopes of both moving average cohorts have started to trend higher as well.
  • We like using Guppy analysis as it’s kept investors away from false bottoms over the last several months. This is the first time we’ve seen confirmation of a clear bullish signal, which implies a trend reversal could be upon us.
  • For more, Delphi members can see our latest Flash Update here.

Amouranth’s DAO Brings ‘SimpFi’ to Crypto, and the Why of Token Swaps
[Excerpt from our Mar. 28 DAO Insights]

Aave <> Balancer Partnership

  • Synopsis: The Llama Community, through Mathew Graham, is proposing a partnership between Balancer and Aave. Aave will swap 14,666 AAVE from the reserve for 200k BAL tokens from Balancer as part of the partnership. Aave will acquire an additional 100k BAL through a 50bps bonding curve, at $11 per BAL. Aave will deposit the 300k BAL tokens in Balancers v2 BAL:ETH pool and use them to participate in Balancers ‘ve’ tokenomics. Aave’s new governance power in Balancer will be used to drive rewards and liquidity to a-token pools. This purchase would give Aave control of 3.8% of the total veBAL supply, which they could use to direct 3,085 of the BAL distribution each week.
  • Pro Arguments: Most responses in the forum were positive and asked follow-up questions. This proposal would make Aave one of the top 30 holders of BAL and allow them to have a dominant position in the ‘BAL wars’. The proposal also puts idle treasury assets to use in the ecosystem. A token swap strengthens an already strong relationship between the two DAOs.
  • Counter Arguments: Some questions asked for the reasons for implementing a bonding curve, to which Mathew Graham answeredEboado asked about the frequency of Balancer token swaps. Members of the Balancer team responded that token swaps were only for long-term partners and that this may be the last swap for a while. And finally, there were some minor concerns around the price impact of Aave adding 300k BAL as liquidity into the pool. Mathew Graham responded that Aave should pair BAL with ETH in the deposit.
  • Our Position: As far as DAO token swaps go, this proposal is well thought out, and presents some utility to both DAOs. Of course, we expect nothing less from the team at Llama. They understand DeFi, DAOs, and tokens. When they post in a forum, we pay attention. But, as token swaps grow in popularity in the space, we are beginning to wonder about their utility. On the surface, it seems like something that DAOs should pursue. They can deploy treasury assets for new tokens, gain assets that they can use to earn yield, and align with other DAOs. But it’s also apparent that token swaps transfer exotic risk to DAOs and their token holders. Risks compound as the DAO is exposed to the risks in another protocol’s treasury, or even opens itself up to a weird meta governance attack through other DAOs. The value in a DAO’s treasury now contains its volatile token and another protocol’s volatile token. At least with a DAOs native token in the treasury, they can work to maintain its value. But when holding someone else’s token, you are, in some ways, at the mercy of the other DAO. Our concern isn’t to disparage token swaps as an idea. They are most likely a net benefit for a DAO, but we realized when reading this that there are no best practices around DAO treasuries and tokens due to the nascent nature of these ecosystems. Token swaps may be part of an emerging best practice, but so far the benefits are intangible, and the risks are very real.
  • For more, Delphi members can see our latest DAO Insights here.
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Joo Kian + 4 others