GAINS Associates
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GAINS Associates

2021 Review — World, Crypto and GAINS

Hello everybody, Alex here. I wanted to publish this recap even though it’s already quite late in 2022.
I believe it’s interesting to go through what happened with some distance. When we take away the emotional component that the present moment brings, we can see things more calmy, differently.
I’ll go quickly over things starting with the whole world and then zooming in on crypto and GAINS.

World

2021 was a year filled with divide, uncertainty and extremes. As always, media likes to exaggerate things to get more engagement, so there was very little room for nuance and we would sometimes wonder if we were in a Black Mirror episode.

People aggressively choosing sides between vax and non vax

How can we really know what’s true and what’s not? Are we manipulated, with our best interest in mind, or not? What’s the right decision considering unknown future risks? These were some of the questions we had to ask ourselves.

It didn’t help that people were getting cancelled left and right on social media. Censorship will always lead to distrust in our day and age because you can’t 100% make up reality, things always get through.

J.K. Rowling getting cancelled, along with many others

Another scary trend was gender dysphoria and pronouns constantly changing. Are we facing an identity crisis?

All that was of course happening on social media. The new reality, the metaverse before the metaverse, that provides us with non-stop distractions of the most fascinating nature.

Social Media — Why it Sickens the Self and Divides Society: https://www.youtube.com/watch?v=FHwfJDqerGM

In these critical times, it seems essential that we exercise our capability to unplug, think for ourselves using first principles and reconnect with what’s important.

Governments had to battle a 2-faced enemy with Covid. Of course, the main one was about keeping as many people as we could healthy. However, while being safe surely comes with good health first, it’s also about being financially ok.
Here came inflation, the stimulus checks, the feast… in a word: brrrrrrr.

https://brrr.money/

In a never-ending quest to satisfy people and markets, because numbers must go up, governments are printing and printing money. Is this sustainable or will they need to get off the drugs at some point? The issue is that rehab is painful and not popular, and politicians want to keep on getting elected.
Governments make the rules and don’t have to answer the same way the common man does if he got into the same level of debt.

It feels like we are redefining society. The world is moving faster than ever and we’re entering a new era. A telling quote is the following from our elites at Davos.

You will not own anything and you will be happy — Davos.

Then who will own things? Our masters? A fight for sovereignty might be near.

Crypto

The above can seem like a gloomy world but if you’re here, in the small crypto world, I hope it’s been quite good for you. If it hasn’t, then keep on going. This is the single market on Earth where opportunities are so big and plentiful.
We have seen so much innovation, new trends and of course as always, hacks, which are a testament to how fast we’re moving.

The beginning of the bull run. Thanks Elon! :)

On February 8, Tesla bought 1.5B worth of Bitcoin. Making Bitcoin pump from 38 to $46k in just a few hours, also pushing the entire crypto valuation above $1T for the first time.

Shortly after, Elon announced on Twitter that Tesla will accept BTC as payment, and the price soared to 60k as a consequence.

On March 11, NFTs erupted in the scene with Beeple who sold this NFT for $69M.

“Everydays — The First 5000 Days” by Beeple — Sold for $69M

In April, Coinbase had a groundbreaking IPO, being valued at over $100B at some point during the day.

Coinbase was valued at $100B+ on the day of its IPO

In May, Bitcoin went down from 60k to 32k in just a few days. Tesla backpedaled and stopped accepting Bitcoin as payment quoting ecological concerns. Time to exit all crypto markets?

Moreover, in June, China banned crypto mining (for the ninth time?) and we saw a big exodus of miners. As a result, Bitcoin saw its hashrate divided by 2 in a short timeframe. Miners relocated to Texas, Canada or Kazakhstan among others.

In June, in an amazingly pioneer move, El Salvador announced that Bitcoin became official tender in their country.

Nayib Bukele — President of El Salvador and part time crypto chad

On August 23rd, Visa bought a CryptoPunk, recognizing that they would be a significant landmark in the world. Probably nothing.

VISA’s CryptoPunk buy

In October, Facebook became Meta and the Metaverse trend went parabolic, more on that with some of our deals below ;). However, it brought concerns from some of our best thinkers about what the future would hold: a centralized and controlled, possibly dystopian metaverse, versus an open one, where people are free.

Do you trust the Zuck? At least he can pump our bags for a bit.

On November 7, Axie Infinity reached a $10B+ valuation with more than 2 million monthly players. Play-to-Earn revolutionized the economies of a number of countries especially in South East Asia. Politicians in the Philippines even started advertising on Axie, it became a real societal shift.

An ad for a politician in the game Axie Infinity.

A few days, later, crypto reached a $3T market cap and Jack Dorsey left Twitter to be full-time web3.

In December, Adidas launched an NFT shoes collection, following their rival Nike in the metaverse. They also bought a Bored Ape alongside Omar Sy, Eminem, Post Malone, Stephen Curry and many others.

Adidas and Nike are in the metaverse. Would you buy digital shoes?

To note, MicroStrategy bought even more bitcoins throughout the year. It held exactly 124,391 BTC on December 29th. They were acquired for ~$3.75 billion at an average price of ~$30,159 per bitcoin.

What a year it has been, with many ups and downs, from 30k to 60k to 30k again, to 69k and again back to 35k. Crypto is definitely making noise in the mainstream media and I believe the year of adoption is coming, soon.

GAINS

So, why did I start with a review of the year in the world and in crypto? Because it is our job to know what’s going on and make sense of all this activity (dare I say chaos?), in order to make the best decisions and offer the best deals (and returns) to our members.

That means acting quick to follow emerging trends as it would be silly not to ride these waves, and afterward getting a feel for when things start to dry out and pivot into the next hyped thing. And also, exploring some narratives and ecosystems that are not yet trending but in which we see potential. We had great successes by looking into the Terra ecosystem for example.

For GAINS, it has been an intense, great and challenging year.

It’s been intense as we ran 121 deals for $21M+, having sometimes 7 deals a week, several weeks in a row. In full transparency, here’s all the data.

Deals sorted by current ROI

It’s been great as we had many deals perform extremely well. We are honored and grateful to be supporting fellow entrepreneurs in their journey. They know we’ll be with them for the long term.

The average ROI at current prices, including all deals, is 2.81x, which means GAINS outperformed all the traditional VCs by a factor of 10, as they have an IRR of ~20%.

With the volume we did in 2021 and this average return we produced, we can roughly estimate that we created between 50 and $100M in value for our members.

Deals sorted by peak ROI. We got our first 1,000x this year: Bloktopia!🎉

We had 41 projects with a peak ROI above 10x, which means that investors that managed to time the market made much, much more than 2.81x on average.

Here are the projects that peaked the highest: Bloktopia (1017x), Cryowar (262x), Sidus (112x) and Project Seed (92x).

Something interesting is that we have at least one iconic project per year.
In 2018, we got in the private sale of Quant Network (rank 70).
In 2019, we got in the private sale of Hedera Hashgraph (rank 34).
In 2020, we got in the private sale of Avalanche (rank 10).
In 2021, we got in the private sale of Bloktopia (1000x).

We can also notice an argument for diversification beyond risk mitigation, as it’s actually profit-motivated. Indeed, investing has great variability: 1 out of 100 projects will do so exceptionally well that you really don’t want to miss it.

It’s similar to the traditional stock market: “between 1999 and 2018, the annual return on the S&P 500 was 5.6%, but your return would only have been 2.0% if you had sat out the 10 best days (or roughly 0.4% of the trading days)”.

In order to understand trends even more, we had a look at the category of projects we invested in.
Without surprise, 2021 was the year of GameFi. DeFi projects were still going around quite a bit in second place. And in third place, we had Metaverse projects.

Will Play-to-Earn be sustainable?

While Ethereum still has gas issues, more than a third of projects issued their token there. However, we can see that BSC has attracted a huge number of projects, especially in the gaming field. In third place, we have Polygon, Solana and Avalanche competing.

We can wonder why Polkadot is so highly valued compared to the number of tokens issued there. It was actually reflected in the market caps: Polkadot had a bad year compared to these 3 other L1s.

At the beginning of 2021, these were the market caps:

— Polkadot: 8B

— Avalanche: 235M

— Solana & Polygon: only 70M!

At the end of 2021, these were the market caps:

— Solana: 52B

— Polkadot: 28B

— Avalanche: 27B

— Polygon: 17B

2021 was a good year for many L1s

While the number of projects is not everything for the valuation of an L1, it certainly plays a big role and we have yet to see easy-to-use tools for the Polkadot ecosystem or many exciting projects for that matter. I’m sure everyone remembers how all projects had “Polka” in their name at some point but almost none actually launched on Polkadot.

In any case, despite all these amazing investments, it’s also been a challenging year, as with growth comes challenges.

Because of the bull market and word of mouth around our attractive deals, we had good problems :) Suddenly, a lot of newcomers came to us with many personal questions. They had misunderstandings about different chains. They thought they hadn’t received tokens when in fact they had because they hadn’t added them to their MetaMask, and more. All this is making us smile now. It’s a testament to how early we still are and why we can get these outrageous returns. As we go mainstream, interfaces will evolve to hide this complexity from users, and returns will most likely go down. Somehow, there is profitability and happiness to find in this complexity.

At the time though, it was hard to keep up with all these questions. We were doing our best to answer them while simultaneously building a platform to smooth out the investing process. It’s now live and we have successfully conducted 38 deals on it so far.

Away with the spreadsheets and manual tracking, welcome to the GAINS Private platform!

Our members can see all the details about deals, invest and track everything on our platform: https://app.gains-associates.com/.

The platform is only available to $GAINS holders which also brings me to say that 2021 was the year we proudly launched our token. At 4c during the private sale, it gave returns of 44x at the top of $1.78. It is still trading at around 7x today and the token proved particularly resistant to adverse market sentiment, a testament to how strong our community is. There are not many things that feel better than that in the world.

We achieved more than 2,000 holders across Ethereum and BSC combined.

$GAINS token chart

We revamped our landing page to better explain what we do and how to join us. It’s as easy as buying enough GAINS here: https://pancakeswap.finance/swap?outputCurrency=0xd9ea58350bf120e2169a35fa1afc31975b07de01 (always double check URLs and contract addresses) and signing up on our website! :)

“When I grow up, I wanna be a GAINS Whale” — Jimmy, 8 year old

On the content side, we published exactly 50 interviews with projects on our YouTube channel, or about 1 per week.

More exciting content to come

We hosted 264 AMAs. With $150 of prizes for each, that’s nearly $40k worth of value offered to anyone willing to take the time to learn about crypto. Wen rebrand as Paid-to-Learn?

Now, the main thing on our minds is mainstream adoption. Especially, since it might come sooner than we think if unpredictable world events keep happening, making people realize how the current system is a house of cards waiting to be blown up.
This is how we get to the next level, and we absolutely need to be ready for it.
However, we’re not going to get there tomorrow. We’re going to work on making things easy, work on the customer journey so that people take pleasure in investing and work on spreading the word out.

One step in this direction is our launchpad. It is currently ready and it’s going to cater to a different category of people, those who want to invest smaller amounts: the equivalent of your average eToro customer who’s playing with stocks, but in crypto.

By zooming in on what happened first in the whole world, then in crypto and then for GAINS, I also hope to put in light that despite having an already vibrant community, we have so much more to do. GAINS, while successful, is also still extremely small. It’s humbling and telling us to go get it and make it happen. There are so many people in crypto to tell about what we’re doing. So many non crypto people to tell about this new paradigm of value transfer that is open, decentralized, borderless and censorship-resistant, in a word: revolutionary.

We have a lot to do. In that regard, I’d like to address token price and team/advisors token unlock. They’re very important to our holders and to us. While not something we take a look at every day, they’re a signal to the outside world and we’re acutely aware of this, hence why we want to communicate about it.

Skin in the game will always be a part of our DNA.

The condition for the team tokens to unlock was to do a cumulative 1,000x on our deals. This has been more than achieved in the past year, so they will all unlock with a 1-year vesting. However, I would like to reiterate that we have no intention to dump tokens, and especially not at these low prices we’re currently at. We have told our friends and family about GAINS and some have bought. We have personally bought on the open market even at prices higher than the current price. We have not sold any token.

We know how big decentralized investing can become and we will do everything to make it happen. We also count on you to help us along the way, as you have already, giving us feedback when it’s needed and telling your friends about crypto and the gains you’re making with GAINS ;)

I would like to thank everyone who’s on this journey with us. I know we wouldn’t be there without some amazing people that are a part of GAINS. I personally want to spend more time interacting and having fun in our community. It’s been a challenge to find time but communities are the hearts of projects. We have wonderful people from all walks of life that share a passion for something new, that are daring, that want more out of life and I love it. We’re united by memes during the good and the bad.

Whether 2022 will have a bear or bull market (or both), we will keep on pushing. We know we can bring crypto, DeFi and investing to millions of people.

To the moon (Elon, join us!).

— Alexandre Raffin, CEO of GAINS Associates

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