Chief Investment Officer of Arca: Why Sushi is Seriously Undervalued

Recently, Jeff Dorman, chief investment officer of Arca, tweeted about why sushi is undervalued, and Mars Finance compiled it for readers. Interestingly, in November last year, when DeFi tokens were at their lowest point, he surprisingly predicted that UNI tokens would explode in February this year.

1. We believe SUSHI is now the most undervalued token in digital assets. Here's an analysis on valuations, upcoming catalysts, and why the recent downside price action is only temporary

2. Since the beginning of this year, for UNI and other vast DEX markets, the performance of SUSHI has been unsatisfactory. The drop of 50% (still down 30% from the peak) was most pronounced during the peaks and troughs in March and April.

3. Why is this happening? 3 important reasons,

Security company: More than 110 million USDCs were transferred from Circle to Alameda Research Related addresses: November 17 news, according to Paidun monitoring data, more than 110 million USDCs have been transferred from Circle to Alameda Research related addresses recently. [2022/11/17 13:15:21]

6 months ago, the sushi tokens obtained from liquidity mining were unlocked and flowed out;

Growth of Pancakeswap

The hot hype of Uniswap;

Analyzing these reasons, in fact, there is no actual impact on sushi's valuation and core business.

4. The impact of supply; just as liquidity mining can attract new projects overnight, when assets are no longer concerned by the market, the dilution of mining revenue will also bring pain. Let's take a look at the short liquidity mining period of CRV and UNI.

The Block Research: Bitcoin mining revenue fell by more than 26% in June: July 2, according to data compiled by The Block Research, Bitcoin mining revenue in June was only $668 million, down 26.3% from the previous month , down 61% from October 2021. The majority of Bitcoin mining revenue in June came from block rewards ($656.47 million), with only a small portion coming from transaction fees ($11.47 million). In June, the income of Bitcoin miners was about 1.26 times that of Ethereum miners. Previously, the income of Ethereum miners had exceeded that of Bitcoin miners for many consecutive months. [2022/7/3 1:46:53]

5. At the current price (assuming the unlock is gradually released)

Inflation in April was 204 million;

Inflation in May was 175 million;

Inflation of 150 million in June;

6. Will oversupply have an impact? certainly. Just refer to the price chart of sushi in April. In November 2020, sushi started at a price of $0.6, and after waiting for a 6-month redemption period, farming this began to sell after receiving huge returns. The market keeps swallowing its sell orders for this.

The privacy browser Brave and the University of California, San Diego cooperated to propose a solution that combines network compatibility and privacy SugarCoat: On November 24th, Brave Software, the privacy browser Brave development company, cooperated with the University of California, San Diego to propose a solution SugarCoat , allowing improved privacy without sacrificing web-scale compatibility. SugarCoat helps address this privacy-compatibility tradeoff by automatically creating privacy-preserving implementations of tracking libraries.

Brave will begin rolling out SugarCoat-generated scripts to Brave browser users in the fourth quarter of this year, and will also work with maintainers of popular content-blocking tools so they can enhance user privacy.

SugarCoat's source code and its automation framework are completely open source. Brave will also share, grow, and keep updated the library of privacy-preserving alternatives generated by SugarCoat so that other privacy tools can incorporate them. [2021/11/24 7:08:24]

7. However, from the perspective of value investing, this shock also creates opportunities. Even taking inflation into account, even on an FDV basis, SUSHI's current price and value are clearly mismatched.

Bibox Marco: BTC may be in a sideways market in the second half of the year and will take off after multiple washings: On May 20, Bibox Miss Rabbit live broadcast room & big coffee came to the eighth quantitative special AMA, Bibox secondary business leader Marco express:

After the halving of BTC, the two factors of cashing out of miners' electricity fees and the entry and exit of traditional institutions have undergone major changes:

Due to the halving of production and the elimination of low-power mining machines, miners need to sell more BTC to maintain the mine. This has led to high selling pressure, and it is naturally difficult to double the price.

Traditional institutions are like white knights. Since May, there have been several waves of crashes, and the sideways time after bottoming out is extremely short. This is impossible for retail funds. In fact, a large proportion of the real transaction volume since May has indeed come from the large dollar purchase orders of Coinbase in the United States.

The game between the two may lead to a sideways slow bull market in the second half of 2020, and BTC will not take off until the market recognizes 9000-10000 as the normal price.

In addition, major mining machine manufacturers are also participating in BTC pricing. Before the halving, the price of the mining machine is 3000+, and after the halving, the price of the mining machine is 7800-8400. Please pay attention to these two prices. [2020/5/21]

News | Austrian bank RBI joins blockchain trade financing platform Marco Polo: According to Cointelegraph, Austrian bank Raiffeisen Bank International (RBI) announced that it will pilot Marco Polo, a blockchain trade financing platform of the blockchain alliance R3. Marco Polo is based on R3's native Corda platform, and its facilities focus on opening account trade financing services. Financial institutions such as ING, Commerzbank, Standard Chartered Bank, and Anglo-American Trade Bank have previously joined. [2019/5/8]

8. Some inflation can also be eased. The ongoing proposal will lock SUSHI into oSushi, similar to the veCRV model, so that the voting rights for the distribution of rewards in the pool depend on the length of time the token holders lock the tokens.

9. If this proposal is passed, SUSHIi tokens will be locked for up to 3 years, thus offsetting some of the dilution. 97% of the community currently supports the proposal.

10. Influence from Uniswap V3; the hype surrounding UNI V3 may also cause SUSHI to perform poorly. But SUSHI and UNI are going in different directions.

UNI is narrowing the scope of spot transactions, and sushi is expanding vertically with Kashi and Bentobox products.

11. SUSHI's transaction fee dividends flow directly to xSushi holders. The UNI governance fee switch is still under discussion. They are competitors, but not winner-take-all. Both of these are strong, moving towards their own unique fields. (Disclosure: Arca is bullish on UNI and SUSHI)

12. Similarly, V3 has little impact on the trading volume of sushiswap and dividends for xSUSHI holders. This is an important metric when evaluating.

13. The impact of the growth of Pancakeswap; SUSHI is called the DEX of the community due to the lack of venture capital support, but it is not the case. DeFi advanced players, cultivators and users interact with multiple dapps and multiple chains.

14. From the unique traders and trading volume/weekly unique traders, it can be seen that there are obviously whales among SUSHI users. This is similar to FTT VS BNB/COIN, FTX can meet the needs of large customers, while BNB/CB can meet the needs of a large number of small retail investors. FTT crushed it this way.

15. The biggest competitor of SUSHI may be CAKE, not UNI. The high gas fee has made CAKE a popular DEX, which is why we see that the TVL of sushiswap is flat, but the transaction volume in March and April is very low, because users did not pay any gas fees, and put users in Pancake Obtain higher LM rewards on the Internet.

16. But from mid-April to today, both TVL and transaction volume have increased again, and BSC may not be the long-term solution for sushi user growth. This shock is unlikely to have long-term effects on CF.

17. Conclusion: These three aspects all affect the price of SUSHI, but have little impact on SUSHI's core business and growth. Since the DEX went live, the CMGR of xSUSHI holders’ trading volume and fee income has increased by 22%.

18. At the same time, SUSHI continues to expand. If it succeeds, it will provide xSUSHI holders with more possibilities for dividends. SUSHI has launched cross-chain transactions and has attracted attention. MATIC: USD 400 million in TVL (about USD 40 million per day for about a week)

19. The ongoing treasury bill diversification proposal will diversify SUSHI, and only put treasury bills in a basket of blue-chip DeFi tokens, reducing risks and strengthening the balance sheet.

20. Projects that do not impact the core business create opportunities to buy growth projects at low multiples. SUSHI is really cheap using any observable metric.

21. This opportunity creates room for further price upside. Limit dilution through oSUSHI; Polygon's TVL/transaction volume growth, increase fee dividend income through Bentobox and Kashi business lines; diversification treasury proposal; sushi IDO platform

22. As investors turn to DeFi (and they do), these are the opportunities to look for.

23. We also made many mistakes in investing in asset classes, but our previous public calls (UNI, LEO, WNXM, EOS) were profitable because they all had a common theme: identify value and capture Cheap uplink optional.

Compile | Zou Zhengdong

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