DATA ROOM GET IN TOUCH $ %

Market Recap | 5 min read

Revenue Producing
Digital Assets Soar
Written by Jeff Dorman, CFA
Jul 12, 2021

What happened this week in the Digital Assets

market

Week-over-Week Price Changes (as of Sunday, 7/11/21)

Everyone Hates Banks

Of all of the egregious fees that the banking industry extracts from customers,

overdraft fees may be the most absurd. Banks can borrow for basically free, and

all transactions are just electronic records which means there is no actual cost

incurred if a balance briefly dips below $0. But given the profitability of this

business line, there is very little being done to protect consumers from incurring

overdraft fees. In 2020, banks collected $31 billion in overdraft fees.

But banks don’t receive any revenue from digital assets. In fact, if digital assets

ultimately succeed, the ability to combine your investment vehicles and your

payment vehicles into one freely sendable asset will ultimately compete with

many revenue lines of banks and brokerages. So naturally, the banks are now

stepping up their efforts to “protect consumers from digital assets”. Last week

Barclay’s announced that customers would no longer be able to send funds to

Binance, for their protection. Needless to say, those customers that were

affected were furious.

Barclays has had 40 violations since 2000, accruing fines totaling almost $6

billion. Barclays has also been accused multiple times of abetting money

laundering. Their stock is -87% since 2007. Meanwhile, the digital assets

industry passed major stress tests in March 2020 and again in May 2021, without

any government assistance or bailouts, and continues to grow despite so many

efforts to thwart its success. Many of the exchanges, including Binance, have

generated tremendous gains for both customers and shareholders.

Barclay’s Stock Price (2006 -2021)

Source: TradingView

The banks are simply focused in the wrong place. Current Binance US CEO and

former Comptroller of the United States, Brian Brooks, may have summarized it

best on his way out of Washington. We now have a solution to putting power

back in the hands of the people, instead of governments and banks trying to

“protect us” from our own success.

Axie Infinity grows revenues -- AXS token skyrockets

One of the tokens that is no longer available to Barclays’ customers is Axie

Infinity (AXS), a gaming token which was first listed by Binance in November

2020. The AXS token rose +123% last week, and has gained over 14,000% since it

was listed on Binance nine months ago. This is not a decentralized

cryptocurrency. This is a company, with a CEO, a parent company with privately

owned equity, a real business model, and rapidly growing revenues, all of which

existed prior to Axie issuing its AXS token. The token was issued to help

bootstrap the growth of the company, and almost every customer and fan of the

game had a chance to buy this token in the early days of its growth. Axie also

popularized the newfound “play-to-earn” gaming model, and it has been a wild

success. Arca portfolio manager and NFT expert, Sasha Fleyshman, pointed out,

“play-to-earn turns sweat equity into actual equity. It aligns players with games

in a way that has never been done before.”

As we discussed last week, Bitcoin is one of the worst performing digital assets

YTD. What we didn’t mention was that some of the best performing digital

assets YTD are all similar to Axie Infinity - real companies, with real cash flows, a

token that accrues economic value, and a way to measure its success. These

companies also align their customers, employees and other stakeholders with

their success.

Top dapps and blockchains based on cumulative protocol revenue in the past

180 days

Source: TokenTerminal

These off-the-run small caps may not be as exciting for the media to talk about,

and certainly aren’t profitable enough for the largest asset managers, OTC

shops and exchanges to focus on, but they are doing exactly what we expect

digital assets to do --- turning customers into equity owners. In a world where

employee and customer alignment has never been further away from company

profits, it’s refreshing to see digital assets figure out the model for success.

Source: Twitter

What’s Driving Token Prices?

! Axie Infinity (AXS) rose +123%. Axie's outperformance can be attributed to

continued revenue growth, with weekly revenue at ~$2.93mm, +140% WoW.

By all accounts, the revenue and volume growth indicates that Axie is seeing

actual adoption and usage of its product.

! Aave (AAVE) gained +20%, but revenues and TVL have remained fairly flat over

the last week. Aave Pro for institutional investors will be released this month,

which will allow institutional investors to use a KYC'd version of Aave.

! Synthetic (SNX) jumped +58%, as Synthetix surpassed $1B in TVL this week.

Decentralized derivative volumes were relatively flat around $1 billion on the

week with Synthetix gaining market share after another strong week of

trading. Synthetix staking also nearly doubled as people rushed to claim the

four airdrops that reportedly will go to Synthetix stakers: Lyra, Thales, Kwenta

and Aedlin.
! Sushiswap (SUSHI) rose +11% after releasing their Q2 review which included

the Q3 roadmap. The main product update is the V3 version releasing on July

20. They also announced their ongoing fundraise which will be approved via a

governance vote. They are looking to raise $60m out of the treasury which

should significantly help to diversify the investor base. Additionally, they

partnered with ArcherDAO to provide an option for MEV shielded

transactions and with Harmony, another L1 where they will be launching all

product lines, furthering their multi-chain growth.

What We’re Reading This Week

USDC Stablecoin Backer Circle to Go Public in $4.5B SPAC Deal

Visa: More Than $1 Billion Spent Using Crypto-Linked Cards in 2021

Bank of America Launches Cryptocurrency Research Effort

Ex-NYSE President Tom Farley’s SPAC to Merge with Bullish to Bring Planned

Crypto Exchange Public

Sen. Warren Warns of Cryptocurrency Risks, Presses SEC on Oversight Authority

And That’s Our Two Satoshis!

Thanks for reading everyone!
Questions or comments, just let us know.

The Arca Portfolio Management Team

Jeff Dorman, CFA - Chief Investment Officer
Katie Talati - Head of Research
Hassan Bassiri, CFA - PM / Analyst
Sasha Fleyshman - Trader
Wes Hansen - Head of Trading & Operations
Alex Woodard- Analyst
Mike Geraci- Trader
Andew Stein, VP of Research

To learn more or talk to us about investing in digital assets and

cryptocurrency
call us now at (424) 289-8068.
'

Subscribe For the Latest

Blockchain News & Analysis

[email protected] SUBSCRIBE

Disclaimer: This commentary is provided as general information only and is in no way intended as investment
advice, investment research, a research report or a recommendation. Any decision to invest or take any other
action with respect to the securities discussed in this commentary may involve risks not discussed herein and
such decisions should not be based solely on the information contained in this document.

Statements in this communication may include forward-looking information and/or may be based on various
assumptions. The forward-looking statements and other views or opinions expressed herein are made as of the
date of this publication. Actual future results or occurrences may differ significantly from those anticipated and
there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to
change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein.

In considering any performance information included in this commentary, it should be noted that past
performance is not a guarantee of future results and there can be no assurance that future results will be realized.
Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain
information provided herein may be based on third-party sources, which information, although believed to be
accurate, has not been independently verified. Arca and/or certain of its affiliates and/or clients hold and may, in
the future, hold a financial interest in securities that are the same as or substantially similar to the securities
discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the
past or in the future and Arca and/or its clients may sell such financial interests at any time. The information
provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to
buy any securities. This commentary has not been reviewed or approved by any regulatory authority and has
been prepared without regard to the individual financial circumstances or objectives of persons who may receive
it. The appropriateness of a particular investment or strategy will depend on an investor’s individual
circumstances and objectives.

P R E V I O U S S T O R Y

We Should Appreciate Bitcoin "

More, but it’s Not Defensive

You May Also Like

These Stories on Market Recap

MARKET RECAP MARKET RECAP MARKET RECAP

We Should Debunking Sigh... We’re

Appreciate 10 Digital Writing
Bitcoin Asset Bear About the
More, but Market Fed
it’s Not Theses Jun 21, 2021 |
Defensive Jun 28, 2021 |
6 min read

10 min read
Jul 6, 2021 | 6 min read

No Comments Yet
Let us know what you think

Email*

[email protected]

Are you a Qualified Institutional Buyer/Accredited Investor?

Yes
No

protected by reCAPTCHA
Privacy - Terms

SUBSCRIBE

Arca

Los Angeles I New York

(424) 400-7444
[email protected]

Products Company Contact Us

Hedge Funds About
Bitcoin Trust Team
First Name*
ArCoin Careers
Press

Legal
Privacy Resources Last Name*

Terms of Use Blog

Data Room

Email*

[email protected]

Investor Type*

Institutional Investor: Company or

organization that invests money on behalf of
clients or members. Accredited Individual
Investor: Anyone who either earned income
that exceeded $200,000 (or $300,000
together with a spouse) in each of the prior
two years, and reasonably expects the same
for the current year, OR, has a net worth over
$1 million, either alone or together with a
spouse (excluding the value of the person’s
primary residence).
Qualified Institutional Buyer
Accredited Individual Investor
Non-Accredited Individual Investor

Which products are you interested in learning more

about? *

Arca Digital Assets Fund: Hedge Fund

ArCoin
Arca AI Bitcoin Trust

Message

SEND

Copyright © 2021 Arca. All Rights Reserved.

©2020 by Arca Funds Past performance is not indicative of future results. Past performance is not
indicative of future results. Investors should carefully consider the investment objectives, risks,
charges and expenses of funds sponsored by Arca Funds (the "Funds"). Other important information
about the Funds are in each respective Fund's offering documents. A Fund's offering documents
should be read carefully before investing. Disclaimer: This commentary is provided as general
information only and is in no way intended as investment advice, investment research, a research
report or a recommendation. Any decision to invest or take any other action with respect to the
securities discussed in this commentary may involve risks not discussed herein and such decisions
#
should not be based solely on the information contained in this document.