For each investment, we conduct a ~20 page writeup that follows a formulaic template to assess the project's fundamentals. These are similar to deal memos in traditional VC. We then take this qualitative writeup and quantify each line item for 30 variables, such as team, business model, value accrual, etc. We view these as living documents, which we update on a quarterly basis as these early stage projects either grow and evolve or stagnate and die.
To-date we have done over 100 token write-ups across 20+ different verticals. Once we complete writeups for all tokens in a given vertical, we discuss the merits of each project as an investment committee.
Unlike traditional VC or equity investments, where project information is often limited and financials are reported quarterly, blockchain-based projects offer a distinct advantage. They generate real-time data, readily available for near real-time analysis through a shared public ledger and opensource code base. We harness these data-driven insights to track activity in each vertical, for example – daily active users, new user growth, revenue, total value locked, etc. Whenever we detect sustained growth or contraction in fundamental metrics, we proactively reevaluate our strategic positioning within that vertical. Since our investments in these projects are liquid, we can rebalance our portfolio to stay aligned with the strongest projects in each category.
Optimism hit $8B in TVL, but faces competition from L2s like Base
