Category: Monthly Newsletter

September 2020: Liquidity Miners Chase Rewards and Drive Competition Within DeFi

Decentralized finance (DeFi) is an extension of the original use case for cryptocurrency and digital assets: a means to transact value without the interference of third party middlemen or governmental systems. While digital assets have performed well in peer to peer transactions, performing wider services such as credit and lending have since eluded cryptocurrency developers. As the pandemic has constrained access to credit and caused banks to lower interest rates, customers have begun searching for alternatives, leading to the explosive growth of decentralized currency; banking services provided more cheaply and transparently on the blockchain.

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Decentralized Finance: An Explosive New Paradigm Challenges Existing Finance Systems

Decentralized finance (DeFi) is an extension of the original use case for cryptocurrency and digital assets: a means to transact value without the interference of third party middlemen or governmental systems. While digital assets have performed well in peer to peer transactions, performing wider services such as credit and lending have since eluded cryptocurrency developers. As the pandemic has constrained access to credit and caused banks to lower interest rates, customers have begun searching for alternatives, leading to the explosive growth of decentralized currency; banking services provided more cheaply and transparently on the blockchain.

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Artificial Intelligence is the Future of Venture Capital

The amount of available data to make decisions continues to explode with each passing year and threatens to overwhelm human operators. After spending decades as a niche field in academics, over the past twenty years AI has finally reached the hands of the general public through hastening compute power and freer exchange of information over the Internet. While it won’t strictly do your job for you, it still is an invaluable tool that should be put to use whenever applicable.

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Fintech’s Priorities Shift Due to Market Winds

Fintech is a sector that encompasses a bevy of offerings, from credit and lending, regulatory compliance, personal finance, insurance, capital markets, money transfer, to real estate. This umbrella consists of industries with wildly different priorities and needs, so shifting market conditions could benefit some industries and harm others. The pandemic has changed the course of how business is done, which will have knock-on effects throughout the entire sector

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Insider Insights May 2020: Opportunities in Essential Businesses Abound

Although the effects of the COVID pandemic are not over, over the past month there have been several signs that the picture has been changing for the better. On May 26th, 2020, the New York Stock Exchange trading floor re-opened after two months, after which the Dow Jones jumped 530 points. Non-essential businesses across America have begun to reopen with distancing guidelines in place, and testing has doubled over the past month while nationwide cases continue to slowly decline.

DJIA Year in Review (Source: MarketWatch)

Previously, it was discussed that much of the economic damage was caused by logistics problems and impediments to business operations rather than wider systemic depression. As businesses reopen and restrictions begin to slacken, there appears to be optimism in the economy, evidenced by the Dow Jones having clawed back many of its losses over the prior two months, although more work remains to be done. Nevertheless, the pandemic will continue to operate how businesses operate for the foreseeable future, which will change the venture capital map significantly.
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Insider Insights April 2020: COVID-19 as a Black Swan Event, and How to Navigate It

The pandemic qualifies in the strictest sense as a “black swan” event – an extremely rare event with severe implications for an economy’s function. They are destructive, uncontrollable, and unpredictable, although many will incorrectly claim in hindsight that they should have been seen coming. Black swan events can come from many sources, whether they are geopolitical, economic, or natural; previous examples included events such as 9/11 and the dot-com bubble.

By any definition of the event, COVID-19 fits the bill, but where it differs from other events is in both the size of the event and the number of industries that it touches. The pandemic has affected economies in a heretofore unique way in that it has prevented labor from being accomplished in an asymmetric and uneven way. Although workforces have moved to adapt and workers have been able to accomplish job duties from home, the scale and amount that can be done remotely varies widely between industries. This has caused either weakening or complete breaking of supply chains in some cases. Services and tourism industries in particular have been the hardest hit, and unemployment has spiked to a higher point than the 2008 recession at the steepest rate on record.
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Insider Insights March 2020: COVID-19 Upends Markets and Provides Digital Asset Opportunities

The COVID-19 outbreak has temporarily upended life across the world, radically altered how businesses operate, and left global markets reeling. It is projected to be the largest epidemic the United States has faced in a generation, and as such, there is a great deal of uncertainty about the long-term implications for the economy and investment ecosphere. Fortunately, there remain options in these uncertain times, and despite economic turmoil, digital assets have a center-stage role to play in how things shape up.
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February 2020 Insider Insights Issue: What 2019 Brought Us, and What to Expect in 2020

2019 has brought significant changes to the venture capital market; some existing data points have solidified and become new trends in their own right, and other well-known aspects of the investment ecosystem have dwindled away and been supplanted by new rules. 2019 continued a historic, almost unprecedented bull run, and even as it reached its peak, there have been shifts in how deals are made that will bear great importance heading into 2020.
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Developing Opportunities in Varys Capital’s Sectors of Interest

Varys Capital is focused on investment opportunities in growing markets and maintains a close eye on developing and emergent spaces within them. The primary focuses lie within asset management, commercial exchanges, trade finance, digital asset infrastructure, and the e-sports and gaming industries. The following developments demonstrate just how quickly these fields move and how important it is to be on the ball for each of them. Read More

Digital Asset Trends to Watch in 2020

Looking Forward to the Next Year and Beyond

As the current year wraps up, it would be wise to take a moment to review the advances that digital assets have made into business and investment markets over the past year. Much of the past year’s events have set the stage for further growth in 2020. Digital assets and blockchain have both made major inroads into infrastructure and are poised for great success in the coming new decade. Read More

Fidelity Investments acquires a BitLicense, Opening the Door to New York’s Financial Market 

Regulators Combine and Focus Their Efforts

This summer, the New York State Department of Financial Services (NYDFS) has assembled its personnel that are focused on supervising and regulating business operating in digital assets into a single, unified team. Previously, the staff tasked with this responsibility were spread over different siloed departments, making it difficult for them to communicate. Although the regulatory body has been operating and issuing a small number of digital asset charters, colloquially known as BitLicenses to well-known cryptocurrency exchanges such as BitStamp and Coinbase in the past, its latest issuance to Fidelity Investments is notable being the first major institution to receive one of the coveted licenses.

This represents the 23rd such license granted to institutions in New York State to date, the most recent prior to this being Bakkt, which proceeded to launch regulated Bitcoin futures on the New York Stock Exchange. Other recent license recipients include PAX Gold, a gold-pegged asset-backed token, and BUSD, a USD-pegged asset-backed token.
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Bakkt’s Flopped Launch Exhibits Negative Market Sentiment.. or Does It?

The State of the Bitcoin Market

The prior few months have exhibited market indicators that could be viewed as concerning for digital assets across the board – most notably Bitcoin, which is viewed as the flagship asset, due to its length of history and level of utilization. Although trading prices are not terribly far off from their recent peaks and represent quite a healthy gain over the past several months, trading volume has appeared to become chilled as a result of wider market news. Despite this, several bright spots remain and a breakdown of what’s happening will show the best way forward and how to put these indicators into wider context.

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