A More Holistic Approach to Crypto Research. The Case of the DeRace Metaverse.
Ladies and gentleman, after a short hiatus I am back with some more crypto banter. Not that I was taking it easy. In fact, I was busy with the DeRace asset profile that I was doing for the Messari Hub. It was my first deep dive into analyzing a token properly and today I would like to share with you some of my insights that I have gained from my maiden voyage.
Before I do that I would like to start with a DISCLAIMER: I am not employed by Messari.io. The opinions expressed within this post are solely mine and do not reflect the opinions of and beliefs of Messari.io or its affiliates. Messari Hub merely matches contributing analysts with crypto organizations that wish to fund independent research on established or emerging projects.
With that out of the way let’s banter folks. First things first — DeRace — yeah nah! But that is beside the point. I will go through some of my insights that have led me to this conclusion and then you can make your own decision.
Good timing to get back into modus operandi as I look at those smiling crypto charts. Bitcoin is up 14.4% while Ethereum is back to $2909. The real star though is Luna, which is back to $90.20 (up 81.4% in the last 7 days). If you have missed the boat on Luna then check out my Deep Dive into Terra (LUNA) — Part 2.
This brings me to my first lesson. Don’t trade geopolitical events. Raoul Pal says it best:
It should be abundantly clear that crypto market cycles are difficult to predict. They are highly dynamic as slew of forces — liquidity, TVL, market sentiment, geo-political factors e.g. the Russian invasion of Ukraine, Elon Musk tweets, etc. — are all at play. This leads me to conclude that timing the market is impossible and futile. Accordingly, I think it is better to stay the course by taking the volatility and market swings in stride.
My deep dive into DeRace platform has also made it clear to me that my current portfolio is way too diversified. Somewhere along the line I have aped into everything that moves in an upward direction without doing the proper due diligence. Alex Becker hits the nail on the head with this Tweet:
I think that Alex Becker is absolutely right on this one — Case in point, my portfolio includes Wilder World and Thetan Arena. Promising projects but I must admit that I have aped into these without doing proper due diligence as I haven’t really bothered to look into their tokenomics, nor have I read their whitepaper.
Besides, it is time to admit to myself that I am just not into the whole Metaverse thing nor GameFi for that matter. Yes, I get it — there is plenty of alpha in this space but it’s just not my cuppa tea. I am not a gamer plus as a Kiwi I’d choose kayaking with dolphins over loitering at the Meta Lite Bar In Decentraland.
Be that as it may, I have decided to hone in on layer 1s and DeFi as I have always been very passionate about blockchain and its ability to transform traditional finance. So it’s time to ask yourselves: How diversified is your portfolio? What are you passionate about?
The next big insight that I have gained by alayzing DeRace is that I need to look at crypto projects more holistically. In particular, it is no big secret that I have always prefered qualitative research over quantitative analysis. Simply put, I don’t like numbers — never have and probably never will. Accordingly, I have never bothered to fully understand the tokenomics part of a project.
Big mistake — I have come to appreciate that tokenomics is in fact a very important metric to be considered in the DYOR process as it helps to ascertain the future worth of an asset i.e. it gives us an insight into the profitability of a crypto project over the other in the future.
Case in point, at the beginning of this post I gave DeRace a wee bit of a trashing and I have done so primarily because their tokenomics are borderline dodgy. But let me take you through some of their official numbers and you decide for yourself.
So here it goes: Total supply 120,000,000 DERC tokens. So far so good.
Now let’s look at their Marketing / Eco supply: Total 18,000,000 DERC tokens.
10% TGE (Token Generating Event) = 1,800,000 DERC tokens. This means that 1.8 million tokens were initially released.
Next is Vesting which is the process of locking and releasing tokens after a given time.
2.5% is scheduled to be released in month 4, 6, 7, 10, 13, 16, & 19. 2.5% = 450,000 DERC tokens times 7 months = 3,150,000 DERC tokens.
5% is scheduled to be released in month 2, 3, 5, 8, 9, 11, 12, 14, 15, 17, and 18. 5% = 900,000 DERC tokens times 11 months = 9,900,000 DERC tokens.
Total 1,800,000 DERC tokens (10% TGE) + 3,150,000 DERC tokens (2.5% vesting)+ 9,900,000 DERC tokens (5% vesting) = 14,850,000 DERC tokens in total. We are supposed to have 18,000,000 DERC tokens so we are a bit short there — what happened to the rest?
Long story short, their numbers don’t add up. I know my maths sucks so feel free to prove me wrong. I did raise this issue with the DeRace team on their Discord server and their answer was: “Recount it :)” Thank you for that DeRace Vincenta. A very professional reply to a legitimate question.
What’s more, is that DeRace launched an IEO (Initial Exchange Offering) with Gate.io where 8000,000 DERC were released. I don’t see these DERC tokens reflected in their official tokenomics . What is up with that?
Here is my last post on the DeRace Discord server, which was left unanswered:
All in all, I believe that a little transparency is in order. DeRace numbers don’t add up PERIOD! To be sure, there are more inconsistencies but enough said — you get the point. I am not suggesting that they are scammers or what not. For all intents and purposes, DeRace looks like a promising project. I am simply raising the issue that their tokenomics show some inconsistencies and that in itself might raise some eyebrows for potential investors.
Again, I am new to this and I might be completely off track here, so I am open to being corrected by the DeRace team or even you guys. The DeRace Team did not answer my inquiry so go figure!
But ask yourself this: If you are a family office i.e. a wealth management advisory firm that manages the money for ultra-high-net-worth individuals (HNWI) or you have a significant amount of cash to burn then would you invest into DeRace? My answer is a clear and resounding f*ck NO. Unless I am missing something? Feel free to chime in the comments section below.
As I am writing this post my previous look at Audius also comes to mind. Their governance structure was equally dubious. In particular, Audius was run by a Foundation based in Panama who is anonymous because of “security” reasons. But let’s hear from the Founder himself — I promise it sounds way more dodgier when it comes from the horse’s mouth (Tune in at the 56:00 mark).
Like seriously please tune in at the 56:00 mark. What did you think? Would you invest in Audius if you knew about this? Jason Calacanis was definitely surprised by this revelation…
So there is an unknown organization in Panama which we don’t know who’s on it that controls $450.000.000 worth of tokens.
In all seriousness, this is why crypto is considered like the wild, Wild West. Why the f*ck would you be investing in Audius? It is a great idea — don’t get me wrong — but am I the only one who sees a red flag here?
All in all, I have learned the importance of researching a project more holistically. It is always a good idea to look at a variety of information in order to gain a more balanced view of the whole ecosystem. Above all, don’t just listen to your favorite influencer without doing your due diligence. Most likely than not they are invested in these projects themselves.
Case in point, y’all know that I love me some Crypto Banter. For what it’s worth, it is great content, although I am slowly put off by their clickbaity titles & thumbnails. Be that as it may, it appears that Ran Neuner is also an advisor at DeRace ho ho ho, so of course he is going to be pumping the project. And rightly so — nothing wrong with that. So the onus is on us to do our due diligence!
Overall, we need to make sure to look at a variety of information in order to gain a more balanced view of a token under consideration.The Messari Hub, for example, looks at token details, governance, technology, people, treasury & financials. My suggestion would be to step out of your comfort zone and zoom in onto aspects that you have previously ignored. My weakness was definitely tokenomics and I am actively learning the ins and outs of this topic, so I can make better informed investment decisions in the future.
Route 2 Fi has a very insightful Tweet in this regard:
If you are interested in DeFi like I am, then here is a nice pod on evaluating the tokenomics and business models of money market tokens.
And here is another goodie by Miles Deutscher of Crypto Banter no less that relates well to everything that I have just talked about. Very nifty Mr. Deutscher — geiler Name als nicht Deutscher plus it’s an open secret that Kiwis enjoy a friendly but fierce rivalry with Aussies and even though I am not very fond of Aussies, I will give Miles two thumbs up (if only he could dial that accent down — my ears are bleeding). *No worries, it’s just friendly banter — all is well in the land down under.
In conclusion, it should be abundantly clear that crypto market cycles are difficult to predict. Don’t trade geopolitical events. What’s more is that my deep dive into DeRace platform revealed that my current portfolio is way too diversified. It is time to concentrate on one crypto category and do one thing seriously. The next big insight that I have gained by alayzing DeRace is that I need to look at my crypto investments more holistically. This means that I need to make sure to look at a variety of information in order to gain a more balanced view of a token under consideration.
Lastly, I will leave you with a goodie that popped into my head as I was bantering about Miles: Can’t you hear, can’t you hear the thunder. You better run, you better take cover…
Cheerio fellas — Happy Aussie’ing y’all!
Frei Bier / Twitter: @FreiBIER13
DISCLAIMER: My writings are merely a reflection of my learning journey and my attempt to compartmentalize the cryptoverse. I am learning out loud so feel free to correct me or disagree with me. This is not investment advice but my hope is that you find value in some of my links and ideas.