DEXTF Newsletter #12
v2 Phase 2: Fund Migration, Protocol Treasury executed buyback of 5,232 $DEXTF + 24 XTF.XXXXTF, and crypto assets valuation ep.3
Hey Everyone,
Welcome to this week's edition of the DEXTF Newsletter!
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DEXTF updates
Here is this week’s breakdown of one of the hundreds of fund tokens (XTF2000EXC) launched on DEXTF by fund managers. Note the “XTF2” which means that it’s a v2 fund token!
We launched DEXTF phase 2, during which fund managers will migrate their fund tokens from v1 to v2:
For those that want to dig into what’s DEXTF, this is a good start:
Also, DEXTF is hiring! If you think this is you, reach out to us. DMs are open.
Portfolio Metrics
[As of 15th Jul 2021].
Please refer to the DEXTF website for the latest APRs:
DEXTF/ETH is offering a 72% APR
XTF/DEXTF is offering a 90% APR
You can also earn $DEXTF by providing liquidity on Uniswap (29.6K tokens daily) or investing in any of the XTF funds (12K tokens daily)
Current TVL is US$ 2M* (refer to DeFi Pulse)
*calculation includes TVL v1 + TVL v2
You can invest by buying on Uniswap or on the DEXTF app
Here’s a quick guide on how to buy
Protocol Revenue
DEXTF has earned cumulatively US$ 37K in revenue since the Treasury started its asset allocation strategies. This has resulted in an additional buyback of 5,232 $DEXTF and 24 XTF.XXXXTF which was executed this past week.
To date, the cumulative amount of assets bought back by the Treasury are:
115,235 $DEXTF
24 XTF.XXXXTF
Concept of the Week
⚖️ Crypto assets valuation pt. 3
To value crypto assets is an ambitious task. In fact, every day new coins are being spawned to satisfy the thirst for fast-rising and speculative digital assets, which price may not reasonably follow indicators' or ratios' guidance. Many indicators work for Bitcoin simply because it is the dominant crypto asset, which arguably decides the trend of all other crypto tokens' market cap. The close relation that Bitcoin has with all the other tokens is called correlation. Of course, correlation can occur also at a higher level, between the crypto market and traditional equity markets. Something that may hold true as of late.
In this piece, we're going to introduce some ratios and indicators that might be useful to understand the ebbs and flows of financial markets, and hopefully applicable to the upcoming definancial markets.
Valuation Ratios
P/E ratio (price over earnings ratio) is used to understand how many years a stock investor should wait to get back its stock investment. In other words, based on the earnings of that stock (dividends), when will the investor break even? In crypto, this has been adapted to network value (or crypto market cap) over transactions ratio (or NVT ratio)
Network transaction value indicates how much value has been moved on the network over a specific period of time
Network-based analysis is the equivalent of querying consumers data for traditional markets. The beauty of crypto assets is that the transparency of these markets is extremely useful to derive informative indicators, which often needs to be continuously updated as the industry moves fast.
Crypto assets attract value through network effects. The network effect is the exponential increase of product value to other participants as each new user of the product joins the network.
It makes sense indeed to mention Metcalfe's law. The law states that the network value is proportional to the number of network users squared.
We can quickly realize that it's easy to find the number of users since the blockchain provides an address to each user.
Market value to realized value (MVRV) ratio is a more sophisticated ratio in that it solves the lost tokens data skew. This ratio essentially compares the market cap to the cumulative value of network transactions made by the circulating tokens. In other words, the denominator represents the average price at which the tokens were purchased (without counting tokens that never move). The ratio informs the investors on the profit/loss (if already invested, undervalued if looking to invest) multiple relative to the market average.
Mayer Multiple ratio is defined as the price over 200 DMA (200-day moving average). It measures the relationship between the current price and the historical performance of the past 200 days. When the ratio is below 1 it indicates bullishness, as the current price is below the 200-day moving average, and the expectation is that the price will return to its long-held average.
Gordon Growth model is a formula used to calculate whether a stock is under or overvalued relative to the current market price. The inputs include dividend amount (D), yearly dividend growth rate (g) and required rate of return of stock investors (r). Another important assumption is that the company will exist in perpetuity.
P = D / (r-g)
Given the cash flows that network protocols are now churning, the model could be adapted to crypto assets as the industry achieves higher levels of maturity.
Performance ratios support the investors using a checkpoint style analysis.
Sharpe ratio gives investors an indication of how well they've performed with respect to a unit of volatility. Volatility is measured as the standard deviation or variance of returns of security, portfolio or indices.
In finance, the performance is benchmarked to the risk-free rate (discussed in previous part 1).
So Sharpe ratio = (Rp - Rf) / Sp (standard deviation of portfolio) where Rp - Rf is equal to the effective performance of the selected portfolio. We say effective because anything below Rf, or risk-free rate, it's underperforming and it's not worth the investment since investing in the risk-free asset returns a higher Sharpe ratio.
Semper Fortis
DEXTF Team