RelayNode SoCal: December 2, 2019 – Relaynode SoCal

RelayNode SoCal: December 2, 2019 – Relaynode SoCal

Investing in the Roaring 2020s

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To all Relaynode SoCal readers in the US, I hope you had a Happy Thanksgiving! I know those, “How’s that crypto stuff now?” questions are tough after the last two years, but who knows what next Thanksgiving will bring? We’re 29 days away from a new decade and it’s sure to be exciting (one way or another).

I’ve been thinking about where to invest in the next decade (especially if you want some diversification from crypto). Nic Carter retweeted this analysis of current US equity and bond market valuations (at all time highs) which shows that projected 10 year returns on US equities are near zero. However, I believe in the short term there will continue to be upwards price movement in the US markets. Betting against this is betting against the US Fed and its ability to continue rate cuts.

The US federal funds rate target range was 1.5–1.75% as of 10/30/19, but rates in other developed nations are already at or below zero. Where else will yield-hungry investors turn besides the US markets? US banks remain well capitalized and the Fed has more room to cut than most other central banks. As a result, I think it is possible we’ll see abnormally high valuations in US equities continue to rise. I’m personally interested in the Energy & Power sector because investors are overestimating the secular decline of oil & gas as clean energy comes online. Dividend yields for leading companies are mid-single digits even at current valuations.

I also expect the price of US treasuries to rise if the Fed continues to cut — as interest rates move closer to 0%, price increases accelerate.

On Friday, an employee of the Ethereum Foundation, Virgil Griffith, was arrested for allegedly violating the International Emergency Economic Powers Act 50 USC § 1705 (IEEPA). Not much to say here, other than this just seems incredibly reckless and another stark reminder that regulations should not be ignored.

The Libra Association (the governance body of Facebook’s corpocurrency) quietly amended their Articles of Association this week. Some highlights: important votes will now be decided by super majority vs. simple majority; the board can own and operate subsidiaries; they’ve amended the language of intent from “empowering billions of people through a new global currency” to “collaborating with others to create a low cost and accessible payment tool on the Libra Blockchain, serving those most in need…” (likely to avoid the criticism that they are replacing other sovereign currencies); and association membership can now be transferred. A lot more in the tweet storm linked above.

Josh Wolfe of Lux Capital released the opening video to their annual investor dinner. The fund’s thesis broadly revolves around the ebb and flow between “deception and detection.” Lux has made a few crypto investments into Blockstack, Anchorage, and Oasis Labs and the deception v. detection thesis ties in well with the “dissident tech” narrative spreading through the crypto industry. I expect Lux to make more investments into Web3 including: private key management solutions, data encryption, and media validation (proof of truth v. deep fake) in the future.

The ZCash Foundation and ElectricCoinCo are engaged in a series of protocol governance debates. This is important to track because it could set a precedent for other foundations. Creating clear guidelines and incentives for developers after a protocol is launched is critical. One of the major challenges facing crypto is that it still pays better for quality developers to launch their own project rather than maintaining an existing chain.

Written by Roy Learner, Wave Financial, former Enterprise Ethereum Alliance

A few weeks into the transition to Multi-Collateral Dai, only ~20% of the supply has been migrated. With Coinbase migrating Sai to Dai on behalf of users on December 2nd, we may see another large uptick but my guess is that Stability Fee spreads and the Dai Savings Rate will need to be more competitive on MCD to give enough of an incentive for current Sai holders.

Will continue to monitor large spikes in the price of Sai as users try to close out their CDPs as well as liquidity levels in the Sai to Dai migration contract set up by the Maker Foundation, which are currently very low.

Published at Sat, 07 Dec 2019 20:42:35 +0000

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