Enigma Securities

This document has been prepared by Enigma Securities Ltd. in cooperation with members of the Makor Group (“or the “Makor Group”) including Makor Securities London Limited, Oscar Gruss Son, Inc. and Enigma Securities Limited. This document is intended for institutional investors and is not subject to all the independence and disclosure standards applicable to research reports prepared for retail investors. This information represents neither an offer to buy or sell any security or cryptocurrency nor, because it does not take into account the differing needs of individual clients, investment advice. Trading cryptocurrency and related instruments carries a high level of risk and may not be suitable for all investors. Those seeking investment advice specific to their financial profiles and goals should contact their Makor Group representative. Makor believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, security, or cryptocurrency. Makor assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. © 2022 Makor Group. All rights reserved.

"That third point is perhaps the most important for understanding where we are now (and why things, fundamentally, aren't the same this time). Crypto markets are always going to be vulnerable to high volatility and to the potential for structural cascades, because we are talking about underlying instruments with near-instant transmissibility, and products and ecosystems built on top that are simultaneously driven by the need/desire to reach maximum capital efficiency but without all the myriad systems of trust and punishment that exist to keep things in check in traditional markets. " Please find our note attached. #btc #crypto

"Price action was weak coming out of launch, started to pick up in mid-February, and reached its peak to date in March - since then, flows have slowed down, and momentum has for the most part slowed with it. The problem, apart from the difficult-to-swallow pill that net inflows factoring in GBTC outflows were only positive for a brief period in March (albeit of course AUM as a whole is up), is that what we have seen suggests moreso that flows are a lagging indicator of price rather than the other way around - that is, we see ETP inflows as traders chase an asset with momentum, with PA in late May and early June in particular pointing increasingly heavily towards that. " Please find our latest note attached. #eth #etp #etf

"Understanding this, we quickly start to see why an airdrop might have a significant effect prior to itself - as the issuer, you are saying to both developers and users that, if they are early to the platform, they may receive an indeterminate but potentially lucrative reward at some point in the future, at what is in practice a very low cost to you as the originating party (i.e. you might create some sell pressure, but at the end of the day - you print the tokens at no cost to yourself). In return for those tokens, as the issuer, you get an effect which we can describe on a spectrum of cynicism - at the cynical end, you're gaming the metrics and inflating the popularity and potential of your project, and at the uncynical end, you're drumming up public interest and potentially creating a sticky user and developer set as you move further and further forward with your infrastructure. " Please find our latest note attached. #eth #zksync #zks #ethereum

"A triumphant return to form for BTC and ETH this month, one supposes. BTC finished May at +11%, albeit with a significant wick as we saw concerted selling over and over at the $71k-$72k mark and a close at $67k. ETH meanwhile put in +24%; this is the first time that ETH has closed a month vs. BTC a) positively and b) without a drawdown from the monthly high that was greater than the open-close gain since May 2023 (and we still have to go back to 2021 for a gain that seems like more than a short-term retrace. " Please find our latest note attached. #btc #eth #ibit #fbtc

"Does the same paradigm exist outside the US? We won't pretend to know the ins and outs of every single market, but the general answer is 'no'. To go back to the 401k example: per research in 2021 by the Thinking Ahead Institute, 64% of US pension AUM was in defined contribution schemes (i.e. the employee pays in and gets back a return pegged to performance) as opposed to 36% in defined benefit (the more traditional model wherein they pay out a fixed return). Only Australia, which has had a very unique approach to pensions and equity investment in general (as emblemised by 'supers', or superannuation, as something akin to a national birthright), was higher at 86%; of the other top-7 nations, Switzerland was undefined due to complications in categorising its plans, Canada was at 39%, the UK at 19%, the Netherlands at 6%, and Japan at 5%. " Please find our latest note attached. #btc #eth #ibit #fbtc

"The more surprising thing here has been ETH's inability to keep pace or gain ground in such an environment; surges upwards in terms of relative valuation have been brief at best, and ETHBTC has tested below the 0.05 handle that was generally pencilled in as a bottom multiple times in April (it closed the month at 0.04968, albeit is back above it as of the time of writing)." Please find our full note attached. #btc #eth #crypto

"This much, at least, is true. Crypto as an asset class has grown massively from one halving to the next every single time, and while those speculating on the halving event itself have tended to get burned (both 2016 and 2020 saw clear signs of buying on short-term instruments coming into the halving - buyers of said instruments generally lost money in the net), 'buy at the halving and never sell' has been a successful heuristic. Mind you, most heuristics that involve buying the index of crypto in the form of BTC and not selling have been successful; there is a lot of room for error here. " Please find our latest note attached. #btc #crypto #halving

"What are firms getting for their money when they bring in these angels? The answer is just this: they are getting access to the angels' pools of human capital, or as we more commonly call them, friends. This is of vital importance in particular for layer-1s and layer-2s, because what this translates to is a far, far higher probability of access to those on the cutting edge of crypto and with the skills to make a transformative impact in a cutting-edge industry than basically any other method that one could think of." Please find our latest note attached. #monad #eth #sol #evm #crypto

"As we noted last month, MKR has historically been something of a good bet in slower points of a bull market, and it returned impressively at +87%. What is interesting, however, is that it seems that this is no longer enough for MakerDAO going into 2024. The group have made an extremely aggressive proposal to mint up to $1bn DAI using Ethena's USDe and sUSDe as collateral. We have made clear our views on Ethena's likely long-term trajectory already; suffice to say, we tend to agree that this does step over a line in terms of how MakerDAO allocates (their focus on USDC and RWAs having already been criticised), and is more reminiscent of a hedge fund doing business than a bank. We don't think this ends well for DAI or MKR; however, if one is going to deal with USDe, it makes sense to go hard and go early, and so we do tend to think that this will pay off for MakerDAO and MKR in the next few months at least." Please find our full note attached. #btc #eth #mkr #ena