Blockworks’ Daily Newsletter helps thousands of investors understand the markets. In this special sneak-peek issue, Markets Strategist Byron Gilliam tackles some pressing “reader” questions. If you like what you’re reading, be sure to subscribe.
December 2, 2021
“Yeah, well. That’s just like, your opinion, man.”
— The Dude on this week’s mailbag.
These are just my opinions. But they happen to all be correct.
Thanks for the questions this week, reader. Let’s get into it!
Q: How’d your OMG/BOBA call work out?
Darn it, I was hoping no one would notice.
It did not work out like I thought it would — arbs were paying $5 to get exposure to BOBA prior to the spin-off from OMG, which made me think it must be worth well above that ($10, I suggested).
And now it’s trading at … $5.
In my note I said trading at $5 would mean crypto markets are much more efficient than I thought they were (efficient being a bad thing, from a trader’s perspective).
But I’m officially walking that back, because as sensible as the price discovery in BOBA was, the price discovery in OMG looks that much nonsensical.
OMG is the token for the OMG Network, which has been effectively abandoned: it has no devs and no TVL and its website redirects you to the BOBA website.
And yet, it still trades at $8 for a $1.2 billion market cap … $3 per token and $500 million of market cap above BOBA!!!!
Coinmarketcap calls OMG “a dead network with no utility” … which sounds like something that should trade close to zero and certainly below BOBA, which is alive and not without utility.
It’s wacky and I don’t get it.
Which is great! The wackier the better.
I thought the BOBA pricing would demonstrate that there’s still tons of easy alpha in crypto and I got that wrong.
But I’m moving the goalposts and declaring victory because I think the wacky OMG pricing has proved my point: the alpha is there. It’s just maybe not where I thought it was.
Q: I want exposure to NFTs but I only invest in small-cap, US exchange-listed toy companies. Got any tips for me?
Wow, that is a very niche request … but you’ve come to the right place!
Check out Funko, Inc (FNKO): they have a good business making those bobble-headed-looking toys that have gotten popular in recent years.
But it’s a new product line that makes them interesting: they license some IP, like Star Trek, design a few NFTs around it and periodically drop thousands of them for $10 or $20 each … all of which sell out instantly.
Some of the rare ones are selling on secondary markets for $10,000+.
This is an incredible business — it must be something close to 100% margin for them — and it doesn’t appear to be priced into the stock just yet (this is subjective, of course).
It’s worth watching because it might become a next step in the boomer stock market slowly recognizing the value being created in crypto.
Q: Wow. You know a lot about exchange-listed toy companies and NFT blockchains.
Thanks! But, no, not really.
I stole the Funko idea from @pradeepk and I first learned about the WAX blockchain when I googled it 20 minutes ago.
The interesting thing to me is how easy it is to buy these Funko NFTs — they open a WAX wallet for you with a couple of clicks and you can pay with a credit card.
This seems like a much faster way of getting crypto mainstreamed than asking people to invest the hundreds of hours it takes to get comfortable with DeFi.
Q: How many NFTs do you own?
I own one Funko Star Trek Captain Kirk NFT that I bought just now because I didn’t want to answer “zero” to this question.
NFTs are amazing: I’m glad that people are willing to pay for the ownership of a thing that remains free for everyone else to use.
Separating ownership from usage seems like an idea that could potentially reshape the economy in great ways.
But I’m mostly interested in things that could potentially reshape my bank account in great ways.
So shill me an NFT you think will go up.
(Or make me an offer for Captain Kirk.)
Q: Let’s flip this! Got any questions for me?
Yeah, I do, actually: what the heck is the TOMB token all about?
According to its website TOMB is a stablecoin pegged to FTM that is intended to “solve liquidity issues” — which leaves me none the wiser.
I thought the point of stables was to replicate something that’s otherwise off-chain?
I’m asking because tomb.finance offers 1,300% APY for LP’ing FTM/TOMB and being paid 1,300% to provide liquidity for two things that are supposed to be the exact same price I think is one of the weirder things I’ve seen in DeFi so far.
And I love weird stuff, so please explain it to me, reader.
(How does this work now? Do I get the answer next week? This is confusing.)
Q: Do you really think FTX will surpass Nasdaq? Or are you fishing for a retweet from @SBF_FTX?
Those two things are not mutually exclusive.
Nasdaq has an amazing business selling data to professionals and licensing their brand to index providers — there’s a reason the stock trades at 30x earnings.
But while they are leveraging their oligopolistic position in the regulated world of institutional equities, FTX is competing in the unregulated wild to win both retail and institutional customers for brokerage, exchange trading, custody and NFTs.
So as crypto and TradFi markets slowly converge, FTX will be much better placed to benefit.
I genuinely believe that — and if you’re reading, SBF, I wouldn’t say no to a retweet.
OK, time for just one more:
Q: Are any of these really from a “reader” this week?
I read the newsletter every day, right after I write it.
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