Comeback-Story

DeFining Capital is an investment-club that is focusing on crypto-nativ, non skeuomorphic, open-market token-investments. We are investing in ambitious teams with unique ideas that are building towards a more fun, open, economically viable, immersive and meaningful virtual landscape. It is important to us to help newly defining capital and take our part in making the emerging digital economy flourish. We truly believe in a profound change of the internet through crypto-tech in the direction of a more meaningful and positive experience.

As the three founders, we started the investment-club at the beginning of this year (2022) with our own capital, while simultaneously helping our family and friends allocate capital in the crypto-market. What followed was probably the most turbulent months in the history of crypto. The worst macroeconomic environment in a long time combined with a speculation fueled market and central banks all around the world tightening policy was the perfect mix for a toxic cocktail of contagion in the crypto-market. And to be honest we too got caught by the mania and could have made wiser investment decisions. Obviously that is easy to say in hindsight. But the recent events made us reflect and adjust on our thesis and vision for crypto as an essential part of the digital realm. Our conviction is only growing stronger and that is why we want to share our (comeback?) story with you. Let us take this journey together.
Down the rabbit hole into the magical world of cryptocurrencies.

Markets

First I would like to briefly touch on the current investing environment in general. Stocks AND bonds had one of the worst starts to the year since recording began, giving professional money managers a rough time and dragging alternative assets classes down with it. At 28/06/22 BTC was approx. -56% ytd. and ETH approx -69% ytd. (nice). The world is going through unprecedented times of change and uncertainty. This is reflected in global asset prices. But change always brings opportunity, even though this is a difficult period. Learning from the past, adjusting and positively looking forward will result in a better future. We want to embrace this future.

Current situation & benchmark

I would like to give insight into the performance of the fund (if you can even call an investment-club a fund). I know it is rather untypical to give public performance insight, but I know for a fact that a lot of crypto-funds and investors experienced big drawdowns and are now trying to make it. Most of them will not admit they are down bad. It is not fun to admit and even can be shameful. But I think that it is important to share these stories and learn together. I want to give insight, not only because it is uncommon practice and can provide some learnings, but also because I am confident in our ability to come back from this. That is why I call it a comeback story.
I want to take you on this journey and will frequently be updating the current situation of DeFining Capital. This will be a hard, but fun and hopefully rewarding journey.

DeFining Capital’s (capital is fully invested) performance as of 14.08.22:

As you can see it is not really fun to look at, but that is not the point. The point is that it is not the end and there will always be another good opportunity in crypto. Especially when you think about the implication crypto-technology has for the evolution of the internet and the inherent characteristic of crypto (high volatility, high upside). Being able to adjust investment-thesis, not giving up and having conviction in one's ability to identify fundamentally sound projects can lead to extraordinary results, even in these situations. Nevertheless it is of highest importance to still have the mental flexibility to diverge from thesis and investments if necessary and not get lost in one's own ideas and thoughts. Being critical is critical.
And no, crypto is not dead as you can see in “Bitcoin’s historical corrections”.
The thesis for crypto was never this strong and clear.
Now it is about patience and thoughtful positioning.

To back our conviction we started another vehicle (call it “Club II”), seperate from DeFining Capital. Being fully invested in DeFining Capital only left room to rotate from lower conviction positions to higher ones. With “Club II” we are still allocated to projects that are also in DeFining Capital (obviously for way lower prices), but we are leaving more dry powder for being able to swing when an opportunity comes. This liquidity will be key to capture upside from projects that are focusing on building a unique product during these challenging times. And these are the times where the next big projects get built. The decision to invest even more capital while being down -80% in DeFining Capital and having lost money for family and friends was not an easy one. But thinking through our thesis and critically reflecting on it, we came to the conclusion that there is still tremendous upside in crypto and a better macroeconomic environment will also come. The original thesis for crypto did not get invalidated, the thesis only got more compelling and clear.
When prices overshot in 2021, they now undershot and we had to capture this mispricing, even when it felt uncomfortable at first.

“Club II” (capital is 35% invested) performance as of 14.08.22:

Thesis & what are we focusing on?

Crypto is just a sub-trend in a much bigger and seemingly unstoppable unfolding of a digital parallel universe: the Metaverse. The term Metaverse (famously first coined by Neal Stepehnson in the book “Snow Crash” from 1992) existed for a long time, but just recently got launched into the consciousness of millions of people for the first time, creating an initial wave of mainstream hype (If you lived under a rock: Facebook rebranded to Meta. Zuck is not stupid, he also recognized this trend and tries to cash in on it. Spoiler: he will fail). But the technological evolution behind this word has been ongoing for more than 50 years (or even for the whole of human history? We are obsessed with manipulating atoms, leading to the present state of technological advancement).
Obviously the term got way overused, but it is also obvious that there is something there. And looking back on the history of technological advancement and reflecting on the currently important trends, the emergence of the Metaverse seems inevitable.

But what is the Metaverse ? The meaning if very fluid, but for now I like the definition by Matthew Ball:

“A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications and payments”

When looking at crypto there are four sectors that provide a real use case and value in the context of the Metaverse:

• Infrastructure (L1&2, Bridges, Wallets) for interoperability and common rules

• NFTs for ownership, scarcity of goods and ID

• DeFi for an open and global financial layer, enabling trade and digital economies

• DAOs for human and capital coordination

These technologies will bring continuity, meaning, value, personality, community and permanence into digital life, hence making it more fun, immersive and overall more worthwhile. When combining these attributes with great games and open worlds, a truly new virtual experience will become reality. This experience of a fun, immersive world with true meaning, community and value will dwarf all prior virtual experiences and will make social media feel like black&white TV. This is going to be a big deal!

Crypto is a key component of the tech-stack that will make this happen.

Over the coming months and years we will witness the first of these experiences. Call them “PlayFi” (coined by NOR). PlayFi will open the gates to the Metaverse.
And the first interesting projects are in development right now.

We cannot imagine any digital technology more exciting and innovative than this. If you ever played video games, I think you can share this excitement of a “Ready Player One” style experience with infinite possibilities.

We are optimistic that this is one of the best opportunities to invest over the coming months and will bring profound change in the digital landscape. The future is bright and the dawn of the Metaverse is just setting.

To be part of this development foremost as digital explorers, but also as investors, we want to be able to swing in our happy zone when opportunity presents itself and participate in this adventurous innovation. This is key when anticipating such a significant trend. We want to be patient, but always ready. We want to hit right, big and in our happy zone.

Obviously this is one of Warren Buffets mental models and he said it best:

"The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot, and if people are yelling, 'Swing, you bum!' ignore them." "Hitting is the most important part of the game, it is where the big money is."  (wow, quoting Buffet…. When reading articles about investing and there is a Buffet quote I usually get suspicious. But it is what it is, the man got knowledge).

Two projects we are very excited about are NOR and Webaverse. They are amazing teams, building unique technology. If you want to learn more about PlayFi and what will be possible, I highly recommend checking them out.

This is only the beginning and the best is yet to come.
Being optimistic about the future feels contrarian in these times. But we fundamentally believe in the limitless potential of human creativity and problem solving to create a better future. We are looking forward to this exciting journey.

Until next time, fren.

Comeback-Story

DeFining Capital is an investment-club that is focusing on crypto-nativ, non skeuomorphic, open-market token-investments. We are investing in ambitious teams with unique ideas that are building towards a more fun, open, economically viable, immersive and meaningful virtual landscape. It is important to us to help newly defining capital and take our part in making the emerging digital economy flourish. We truly believe in a profound change of the internet through crypto-tech in the direction of a more meaningful and positive experience.

As the three founders, we started the investment-club at the beginning of this year (2022) with our own capital, while simultaneously helping our family and friends allocate capital in the crypto-market. What followed was probably the most turbulent months in the history of crypto. The worst macroeconomic environment in a long time combined with a speculation fueled market and central banks all around the world tightening policy was the perfect mix for a toxic cocktail of contagion in the crypto-market. And to be honest we too got caught by the mania and could have made wiser investment decisions. Obviously that is easy to say in hindsight. But the recent events made us reflect and adjust on our thesis and vision for crypto as an essential part of the digital realm. Our conviction is only growing stronger and that is why we want to share our (comeback?) story with you. Let us take this journey together.
Down the rabbit hole into the magical world of cryptocurrencies.

Markets

First I would like to briefly touch on the current investing environment in general. Stocks AND bonds had one of the worst starts to the year since recording began, giving professional money managers a rough time and dragging alternative assets classes down with it. At 28/06/22 BTC was approx. -56% ytd. and ETH approx -69% ytd. (nice). The world is going through unprecedented times of change and uncertainty. This is reflected in global asset prices. But change always brings opportunity, even though this is a difficult period. Learning from the past, adjusting and positively looking forward will result in a better future. We want to embrace this future.

Current situation & benchmark

I would like to give insight into the performance of the fund (if you can even call an investment-club a fund). I know it is rather untypical to give public performance insight, but I know for a fact that a lot of crypto-funds and investors experienced big drawdowns and are now trying to make it. Most of them will not admit they are down bad. It is not fun to admit and even can be shameful. But I think that it is important to share these stories and learn together. I want to give insight, not only because it is uncommon practice and can provide some learnings, but also because I am confident in our ability to come back from this. That is why I call it a comeback story.
I want to take you on this journey and will frequently be updating the current situation of DeFining Capital. This will be a hard, but fun and hopefully rewarding journey.

DeFining Capital’s (capital is fully invested) performance as of 14.08.22:

As you can see it is not really fun to look at, but that is not the point. The point is that it is not the end and there will always be another good opportunity in crypto. Especially when you think about the implication crypto-technology has for the evolution of the internet and the inherent characteristic of crypto (high volatility, high upside). Being able to adjust investment-thesis, not giving up and having conviction in one's ability to identify fundamentally sound projects can lead to extraordinary results, even in these situations. Nevertheless it is of highest importance to still have the mental flexibility to diverge from thesis and investments if necessary and not get lost in one's own ideas and thoughts. Being critical is critical.
And no, crypto is not dead as you can see in “Bitcoin’s historical corrections”.
The thesis for crypto was never this strong and clear.
Now it is about patience and thoughtful positioning.

To back our conviction we started another vehicle (call it “Club II”), seperate from DeFining Capital. Being fully invested in DeFining Capital only left room to rotate from lower conviction positions to higher ones. With “Club II” we are still allocated to projects that are also in DeFining Capital (obviously for way lower prices), but we are leaving more dry powder for being able to swing when an opportunity comes. This liquidity will be key to capture upside from projects that are focusing on building a unique product during these challenging times. And these are the times where the next big projects get built. The decision to invest even more capital while being down -80% in DeFining Capital and having lost money for family and friends was not an easy one. But thinking through our thesis and critically reflecting on it, we came to the conclusion that there is still tremendous upside in crypto and a better macroeconomic environment will also come. The original thesis for crypto did not get invalidated, the thesis only got more compelling and clear.
When prices overshot in 2021, they now undershot and we had to capture this mispricing, even when it felt uncomfortable at first.

“Club II” (capital is 35% invested) performance as of 14.08.22:

Thesis & what are we focusing on?

Crypto is just a sub-trend in a much bigger and seemingly unstoppable unfolding of a digital parallel universe: the Metaverse. The term Metaverse (famously first coined by Neal Stepehnson in the book “Snow Crash” from 1992) existed for a long time, but just recently got launched into the consciousness of millions of people for the first time, creating an initial wave of mainstream hype (If you lived under a rock: Facebook rebranded to Meta. Zuck is not stupid, he also recognized this trend and tries to cash in on it. Spoiler: he will fail). But the technological evolution behind this word has been ongoing for more than 50 years (or even for the whole of human history? We are obsessed with manipulating atoms, leading to the present state of technological advancement).
Obviously the term got way overused, but it is also obvious that there is something there. And looking back on the history of technological advancement and reflecting on the currently important trends, the emergence of the Metaverse seems inevitable.

But what is the Metaverse ? The meaning if very fluid, but for now I like the definition by Matthew Ball:

“A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications and payments”

When looking at crypto there are four sectors that provide a real use case and value in the context of the Metaverse:

• Infrastructure (L1&2, Bridges, Wallets) for interoperability and common rules

• NFTs for ownership, scarcity of goods and ID

• DeFi for an open and global financial layer, enabling trade and digital economies

• DAOs for human and capital coordination

These technologies will bring continuity, meaning, value, personality, community and permanence into digital life, hence making it more fun, immersive and overall more worthwhile. When combining these attributes with great games and open worlds, a truly new virtual experience will become reality. This experience of a fun, immersive world with true meaning, community and value will dwarf all prior virtual experiences and will make social media feel like black&white TV. This is going to be a big deal!

Crypto is a key component of the tech-stack that will make this happen.

Over the coming months and years we will witness the first of these experiences. Call them “PlayFi” (coined by NOR). PlayFi will open the gates to the Metaverse.
And the first interesting projects are in development right now.

We cannot imagine any digital technology more exciting and innovative than this. If you ever played video games, I think you can share this excitement of a “Ready Player One” style experience with infinite possibilities.

We are optimistic that this is one of the best opportunities to invest over the coming months and will bring profound change in the digital landscape. The future is bright and the dawn of the Metaverse is just setting.

To be part of this development foremost as digital explorers, but also as investors, we want to be able to swing in our happy zone when opportunity presents itself and participate in this adventurous innovation. This is key when anticipating such a significant trend. We want to be patient, but always ready. We want to hit right, big and in our happy zone.

Obviously this is one of Warren Buffets mental models and he said it best:

"The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot, and if people are yelling, 'Swing, you bum!' ignore them." "Hitting is the most important part of the game, it is where the big money is."  (wow, quoting Buffet…. When reading articles about investing and there is a Buffet quote I usually get suspicious. But it is what it is, the man got knowledge).

Two projects we are very excited about are NOR and Webaverse. They are amazing teams, building unique technology. If you want to learn more about PlayFi and what will be possible, I highly recommend checking them out.

This is only the beginning and the best is yet to come.
Being optimistic about the future feels contrarian in these times. But we fundamentally believe in the limitless potential of human creativity and problem solving to create a better future. We are looking forward to this exciting journey.

Until next time, fren.