The treasury spreadsheet showing positions as of 1st of April, 2023 is included at the end of this article. The first quarter has brought significant returns to both our treasury and the crypto market as a whole. The liquid backing of wMEMO has grown nearly 20% while distributing other tokens in the farm to stakers.
A Look Around the Market
The Ethereum Shanghai update is imminent and we are seeing significant ETH price volatility. BTC is showing strength as fear in traditional markets due to several large banking collapses is high. USDC depegged after Silvergate, Signature Bank, and Silicon Valley Banks collapsed. The main treasury did not hold any direct exposure to USDC. DAI and GLP (plus forks) are backed in part by USDC and also depegged in this event, though we sustained no losses.
Our View and Strategy
Interest rate increases are likely nearing the top as the global financial system is stressed. Overall we are neutral with the main treasury while the Treasury Operators pursue more aggressive strategies. We see the greatest risk adjusted returns in investing in projects that are building. This gives us an attractive entry valuation as funds are scarce in this market. We also look for attractive OTC deals.
With that in mind, we purchased 190k UwU tokens at an average price of $9.21. This discount to market reduces spot risk and has paid off as UwU tokens were trading at $12.67 as of April 1st. These positions are all up from January when UwU was trading at $10.28. The cost basis of our UwU tokens continually decreases as we earn a substantial APR (currently at 60%), of mostly stable coin rewards in return for locking our UwU in LP for 8 weeks. This performance solidifies UwU as one of our most outstanding investments.
The DAO previously voted to purchase SIFU tokens and it has been one of our best performers. These tokens are fully backed like wMEMO. Their backing value was $43.60 at the beginning of the quarter and has risen to $54. We are also continuing to vest more tokens daily, with completion by the end of Q2. The liquid treasury value increased over $10mm from this alone– adding $3,045 backing to all circulating wMEMO.
We purchased $3mm of $FLEX tokens OTC for a cost basis of $1.20 per token while it currently trades at $2.71 at time of writing. This gives us significant interest in OPNX (formerly named GTX). OPNX is an innovative CEX being launched by the founders of Coinflex and 3AC. They will offer a marketplace (currently in beta) to trade claims due from companies going through bankruptcies, such as FTX, Celsius, Mt. Gox, and more. They are building quickly with over 60 developers employed.
We invested in Interport in December and it has now launched. Our cost basis was $0.30 with $1.5mm invested. It is currently trading at $1.85 while we continue to vest. We are planning to stake our tokens and/or provide liquidity to support the project.
From the Treasury Operators (note MPX is a GMX fork):
“We are pleased to announce that Wonderland has made an investment of $147,500 into Morphex’s MPX token. We have purchased 500,000 MPX (1% stake) for $147,500 at a price of $0.295 per token. Tokens will be vested linearly across 12 months with a two month cliff (ending soon). The product launched in February on Fantom and has seen fantastic growth. To support our new partner, Wonderland has agreed to provide $500,000 in trading liquidity for 90 days into their $MLP token.”
Our TOs have also provided liquidity to Mummy Finance (also a GMX fork) on Optimism and are enjoying 10% profit sharing by supporting the platform in addition to $MLP liquidity returns.
Stay tuned for future investments and partnerships!
wMEMO began with a backing of $28,275.09 on the 8th of January after redemption ended. The current liquid backing as of the 1st of April with all management and performance fees paid stands at $33,292. Performance fee calculations are shown on an attached spreadsheet.
Buybacks have begun to exceed $30,000 per wMEMO for the first time in over a year. Each buyback below backing further boosts the value of all remaining tokens in circulation and has been a large point of profit for holders. This is accomplished through a combination of manual buybacks and the use of our elastic LP on KyberSwap. Following the implementation of WMP #1, the circulating supply has been reduced by ~208 out of ~3574 total wMEMO, a reduction of ~6%.
The LP range has recently been adjusted to reflect the higher backing and we will continue to organically grow the market price through this method.