Dear LeverFi community members and users, as we progress in our DeFi journey, November is shaping out to be highly turbulent for the entire crypto industry.
Markets have turned highly volatile due to recent upheavals. We hope this update can help to provide additional context, reduce concerns and anxiety for the community, and provide forward looking expectations for our users.
1) Quantifying Alameda/FTX Participation
In the last few days, FTX, one of the top five exchanges globally, suffered from a bank run and is now battling insolvency issues. Alameda Research, a sister company to FTX and a leading trading firm, appears also likely to go under due to overleveraging.
As Alameda Research was an investor in RAMP (RAMP was swapped to LEVER in July 2022), and RAMP/LEVER is often presented under the Alameda portfolio, we believe that it is important to provide transparency and context to our community around Alameda’s private sale participation, and quantify the impact, if any.
Little to No Community Impact Expected
In August 2020, Alameda Research invested 50,000 USDT into the RAMP private sale at 0.006 USDT per RAMP. Compared to Alameda’s typical multi-million investments into projects such as Solana, Serum, Maps etc, we see this as a nominal amount.
As of end Q3 2022, ~70% of their allocation were already claimed. It would be reasonable to assume that tokens claimed to date were already sold by now. The remaining 30%, based on today’s market prices, is worth approx. $100,000–110,000, and unlocks linearly over the next 12 months.
This averages out to less than $10,000 of sell volume per month, assuming that tokens are immediately claimed and sold. For context, the LEVER spot trading volume exceeded $40,000,000 on Binance for the month of October.
Based on the above, we are of the opinion that any potential selling pressure by Alameda is negligible and represents little to no impact for LEVER token holders and the community.
How To Verify This
For users seeking verifications on the above and wish to check on-chain, a possible method is to reference the known list of Alameda Research / FTX wallet addresses provided by Larry Cermak to check for RAMP/LEVER tokens.
A run through of wallets will show that Alameda Research does not hold any RAMP/LEVER tokens. FTX, as an exchange platform dealing with retail users, holds RAMP tokens worth ~$86,000, which we believe are user deposits pending withdrawals.
Users with access to analytics platforms like Nansen.ai can also run wallet analyses to confirm the above.
RAMP Off-Boarded from FTX in July 2022
RAMP was delisted from FTX in July 2022 due to the RAMP to LEVER token swap. As FTX did not support the token swap, LEVER was not relisted on FTX after the token swap.
Due to this, most RAMP/LEVER users had withdrawn their tokens from FTX in Q3 2022. While not by design and is entirely coincidental, this has inadvertently helped our community shift RAMP/LEVER tokens out of FTX several months ahead of today’s insolvency situation.
We hope that the above help to provide our community with more context relating to counterparty activities with Alameda Research and FTX in the past 2.5 years, and address any potential concerns from token holders.
2) Treasury Management and Marketing Budget Plan
2022 is especially challenging to date due to the various black swan events mentioned above.
Following our successful Series A equity fund raise early this year, the team has been focused on prudent treasury management to sustain continued product development and to reinvest into product marketing.
We are happy to share that prudent treasury management has helped us to offset industry negativities. We have, thankfully, no exposure to the Alameda/FTX black swan event.
There are no reduction to our team headcount to date despite mass layouts in tech/web3 this year, and we continue to be on the lookout to interview and hire high potential smart contracts, back-end and front-end developers.
In addition, going forward, we will start to use more stablecoins as rewards for protocol growth programs, such as trading volume incentives on LeverFi or marketing programs with partners such as Binance. LEVER tokens will only be selectively used until the broad market outlook improves.
3) LeverFi Development Updates
Following the completion of LeverFi smart contract audits in October, the team was incorporating additional feedback from auditors and bug bounty partners to enhance security.
Separately, the technical development team devoted significant resources towards gas optimizations following structural storage upgrades in the smart contract. Leveraged trading operations require more complex operations, which require more gas.
Following the optimizations, trading execution gas fees were successfully reduced by 25–30%, which is a significant amount.
All the above has taken more time than expected to complete, but we are now ready. We want to thank our community for your patience and understanding in waiting this out, as our team complete the necessary security upgrades and gas efficiency improvements.
We are excited to share that we are in a position to launch the LeverFi platform in late November. More information will be released shortly in a separate article!
4) Future Roadmap and Growth
Besides the launch of LeverFi, the strategy team has been hard at work to identify market gaps and opportunities, and conducted research into how we can build innovative products that solve user problems.
The LeverFi next-stage product and growth roadmap is already under development, and we are excited to share this with our community early in the upcoming year.
Not your keys, not your assets. The numerous crashes this year have highlighted the problems associated with centralized platforms. While not all centralized platforms are bad actors, the damage caused by even a single bad actor can be far reaching for the average Joe.
DeFi represents an opportunity for transparency and clarity of operations for users. Nonetheless, for users to truly adopt DeFi, there has to be improvements in the current infrastructure, reduced user friction and improved security. LeverFi will be here to help make this happen, and we are excited for what the future holds.
We hope all web3 users continue to stay safe, and be viligant always. For the many affected users, to stay hopeful that asset recoveries will eventually happen. We look forward to continuing on this journey with you.
