NFTsDAO Newsletter #1

NFTsDAO Newsletter #1

By Rekt | DAO | 15 Oct 2021

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Good afternoon NFTsDAO newsletter subscriber,


    The NFT market has evolved quite a bit even since March, when Beeple took the world by storm with his landmark eight-figure Christie's sale, opening the floodgates of interest by the traditional media and New York contemporary art collectors. Since then, we've seen an amplification of excitement with the NFT projects focus trickling down from a single artist to many dozens of projects championed by A-list celebrities, technical trendsetters, and offering interesting use cases and incredible levels of integration with the traditional art markets that continues to inspire.




    While the push among traditional NFT projects is to land as much exposure as possible, we seek to position ourselves away from the stampeding herd. It's fine to have visibility for your project but the real underpinnings of the project should be sound financial or artistic underpinnings. The growth of an artistic personality and vision can take decades and at the very minimum 10,000 hours, the likes of which Beeple and other well-regarded modern digital artists have put into their work in spades. While many projects are trying to position their art as revolutionary, doing so without any visible project leads may work for Banksy but is very unlikely to work for the many thousands of copycat NFT projects that have spouted up on Opensea, especially after several conspicuous rugpulls. Further, even successful projects that have a ground floor of 1 Ethereum or more more lack a long-term plan beyond building exposure and fomenting the FOMO.


     At the end of the day, the art business is still a business and needs to have been strategically structured and prudently planned as such. For this reason, we've been partnering with communities that have these same grand artistic visions, but also compelling use cases designed to make money for the project, leading to increased project value. We're working with xDAI DAO to grow a small collaborative group to stake ETH in a project that seeks to maximize the difference on FTX between the perpetual futures and calendar prices for BTC, ETH, and other coins. This is done brilliantly through an NFT with a tokenized position that is due to the NFT HODLer. As the NFT could be redeemed and retired at any time, the price--and resale royalty percentage--would create a healthy slice of profitability for both xDAI DAO & NFTsDAO.


     Given the breakneck speed of growth characteristic for top blockchain projects, with Coinbase getting a 300x price-to-earnings multiple, such that $1 in profit translates to $300 in stock equity value, even a trickle of profit that is sustainable can amount to a considerable valuation that can provide the resources necessary for a project to thrive. The benefit to NFTsDAO members who would consider staking is, of course, handsome airdrops and liquidity bonuses for this staking.


     When it comes to trading, while many investors choose to go long or short a naked open or short position in Bitcoin or Ethereum, this isn't the most strategic way to go about this. Rather, the savvy investors will open a long calendar position and open a short perpetual futures position on the same asset. If the asset goes up then the calendar will appreciate while the short position loses value, but, let's say that there's a 5% premium on a medium term calendar position at $60,000 and 0% premium on a perpetual futures position, which is generally the case. If the price goes to $65,000 then that 5% premium will be based on this new value, amounting to $3250 instead of the $3000 it was at the $60,000 level. The perpetual position will continue to pay for having shorted bitcoin with an hourly funding rate, which is in contrast to the vast majority of users who pay handsomely to go long bitcoin as aggressively as FTX will permit. This means that this $250 from the increased calendar number comes with very little risk and if the medium term calendar premium increases to, say, 6%, then this profitability number jumps to $600 without having to take on any risk as to whether a position will go up or down. 


    The noise of ticks up or down is too great and even the best technical traders admit that it's almost entirely guesswork and if they could be right 51% of the time they would be sitting aloft looking over Central Park in a sprawling Park Avenue apartment within a few short days with their compounded gains. Macrotrends can be better predicted over a long time horizon, but microtrends are almost impossible with so many variables at play. In short, don't try to time the market.




     Continuing with the aforementioned example, the only real problematic opportunities exist when bitcoin drops considerably and the 5% medium term calendar premium might go down to 3%, say, and that would amount to a loss, but with these overcollateralized positions these are not going to get closed out and the hourly perpetual funding on the short position will be paying an income well in excess of this single-digit premium rate if you hold the calendar to its full term, which is best to do. Almost never does the premium go to 0% because it's too attractive of an arbitrage opportunity for a whale of a trader to buy a short term calendar future, and sell a perpetual future to squeeze a profit if they hold between the horizon of the calendar duration and when the position is opened. 


    If you have any questions about FTX futures trading or would be interested to stake ETH to be a first-mover on the airdrop in this NFTsDAO tokenized futures position project feel free to reach out to get all of your questions answered! 


    - NFTsDAO Lead Advisor

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