We hosted our first annual general meeting with our investor and friends in January 2023. In this series, we will share some top takeaways from our reflection and thoughts on cypto in 2023 and beyond.

/@0x992

The idea of Smrti Lab started in June 2021 and we officially launched on Oct 1st, 2021. This AGM marks our first whole fiscal year. Bitbear and I have been head-down navigating the crypto investment since 2017 when we focused on crypto at Bob Xu’s family office and ZhenFund respectively. 2022 marked the 5th year that we remain flexible, open-minded, and nimble in the industry. This cycle is the 4th crisis (2017/9/4, 2018/12, 2020/3/12, and 2nd half of 2022 after the UST crash) that we have been through.

2022 is a turbulent year for all of us. Nasdaq 100 has dropped nearly 33% in 2022 and Dow Jones Industrial Average lost more than 20%, while the world's best-known cryptocurrency, Bitcoin, shed almost 60% of its value.

In crypto world, Black Swan and Grey Rhino simultaneity happened: LUNA UST stablecoin collapse, FTX Fraud, Greyscale GBTC in debt trouble, Binance FUD, etc. Many people have lost faith in the industry. Although this year has been dramatic and turbulent, we still believe in the promise of a decentralized, open-source, money lego smart contract platform.

On behalf of the entire team at Smrti Lab, we would like to express our heartfelt gratitude for your support over the past year. Your support has allowed us to continue pushing the boundaries of blockchain and crypto public goods, and we are deeply grateful for your trust in Smrti’s vision and mission. We are excited to continue working together as we move into the future and make a positive impact on the world.

/@0x992

2022 is the year of The Great Deleverage.

In May, LUNA and UST collapsed. In July, 3AC filed for Chapter 15 bankruptcy. Meanwhile, Celsius filed for Chapter 11 bankruptcy. In November, FTX suspended withdrawal and seek Binance for help. 3 days later, FTX filed for Chapter 11 bankruptcy. Blockfi also filed for Chapter 11 bankruptcy in late November. Genesis Lending filed for Chapter 11 bankruptcy in Jan 2023.

One major exchange (FTX) with 32 Billion private valuations filed bankruptcy, and 4 CeFi lending (Celsius, BlockFi, Genesis Lending, Voyager) filed bankruptcy. More than a million traders have lost funds in CEX and CeFi lending platforms. People lost confidence in last-standing CEXes and tried to withdraw funds to safer platforms or cold storage.

The cascades of panic selling and liquidation events started on May 8th, 2022, and had not stopped until recently. We anticipate more regulation resources in the states will focus on the centralized crypto companies since retail lenders and traders are involved. To protect retail users , we will eventually see a check and balance on custodians and trading services.

However, what does not kill you will only make you stronger. These are stress tests of a highly efficient permission-less market that our industry aims to build after all.

The Top 10 tokens on Coinmarketcap have been down 80% on average for 2022. With the market sharing a similar path to the Dotcom Bubble in 2001, the question left for us is: How do we manage to invest after the Dotcom bubble/ 2022 Crypto bubble? The winning portfolio over the next cycle (3-7 years) will look drastically different than the existing winners. Most of the future top 10 tokens have not been born yet.

From Google trends, the sentiment is still pessimistic, but the traffic shows interest level is decelerating but it’s stronger than the last bear cycle before DeFi summer.

At Smrti Lab, we constantly ask ourselves one question: Where are we in the cycle?

/@Bitbear

Where is the bottom: Structural Bottom vs Historical Bottom

To know where we are at the cycle , it is more important to consider what type of market we are in: whether we are still in the middle of a long-term directional market or are about to be in a range-bound market. This determines two different kinds of bottoms: Structural Bottom vs. Historical Bottom, which is the beginning of a long bull market.

Using the last 90 years of the SP500 as an example, we can see that there were three periods in history that were decades long range-bound markets: 1929-1954, 1966-1982, and 2001-2010.

If you bought the SP500 in 1929; you might not make profit until 1954; if you bought it in 1966, it will be until 1982; if you bought Intel at the highest point in August 2000, when will you break even? The answer is never, at least until now.

So the premise of investing with a HODL mentality is to recognize whether we are at the beginning of a long cycle, or whether we are in a stagflationary market like the 1970s.

What are the factors that determine a structural bottom, or a historical bottom?

Structural bottom happens due to changes in market structure. I summarized three factors that could contribute to a structural bottom:

Seller Exhaustion: Selling pressure drastically decreases compared to previous periods.  In this type of bottom, the market participants who want to sell or who were forced to sell have already sold. There is limited inventory or incentive for more selling activity.

Market Sentiment: The market is full of despair. No one wants to buy.

The Degree of Deleveraging: Whether it’s equity markets or crypto, bull markets mainly benefit from credit expansion, and the bust of the bubble is often accompanied by intense deleveraging. A fully deleveraged market often also means the bottom of the market.

Structural bottoms can happen in any types of market, whether it’s a long term directional market or a range-bound market.

Historical bottoms are also part of structural bottoms. What makes historical bottoms different is that, in addition to the three factors we just mentioned, historical bottoms tend to happen at the beginning of long-term secular trends.

What is a long-term secular trend? We can all say that, since 1990s, the U.S., if not the world, has been in the midst of several long term secular trends: increased productivity and lower production costs due to globalization and technological development, a sustained low interest rate environment, and adequate supply in the labor market, etc.

We believe that one of the most important questions in thinking about the market today is whether the long-term secular trends that we have been in for the past few decades are facing a change. If conditions change, then what we face next is not the start of another directional market, and the traditional investment philosophy, such as “HODL”, will run into a lot of problems. It is possible to hold for decades to just reach a breakeven.

So is the market now at a structural bottom?

Consider the first factor that leads to a structural bottom, Selling Exhaustion. We will use Bitcoin as an example here.

The chart on the left shows how many holders are bearing the opportunity cost of holding relative to the current price, and the opportunity cost they are bearing is increasing with each day of holding. The price is essentially flat from June 2022 to now, but this indicator is decreasing, which means that the total opportunity cost of holding is increasing and the overall holding behavior is increasing.

The graph on the right side of the chart refers to how many holders are spending, or selling, relative to the current market value. We can see that from the top of the bull market in November 2021, to July 2022, prices fell, and so did the indicator Dormancy Flow, indicating that the selling behavior of holders during that time was outweighing the effect of the same percentage of market capitalization reduction. From July 2022 to the present, with prices essentially flat, the indicator has increased, indicating that the selling behavior has decreased.

Another one of my favorite metrics is the cost of long-term holders relative to the cost of short-term holders.

On the left is a chart form our Q2 letter in June 2022, when the long-term holder cost was around 70% of the short-term holder cost; now, in the chart on the right, this indicator is currently 1.25, which means that buying now is 80% of the long-term holder cost. We can see that historically bottoms are in when this indicator was above 1.2. Although this does not mean that the price will not fall below the current price, or the previous lows in the future, but for any investor looking to buy at a low cost in a longer timeframe, now is a good time to buy.

Crypto is Macro

Although the indicators point to now is a good time to buy, but this does not mean that the future price will not fall below the current price. This is because the market is not just determined by holder. The growth in holder number or overall holding behavior only means a decrease in selling pressure, but a market recovery needs buyers.

Where do the buying orders come from? We believe that buying in a bear market depends on two things: 1. Current valuations are low enough to be attractive to investors, which means the cost of buying in the near term is low relative to long-term holders. 2. Second, and most importantly, we need a recovery in market liquidity.

Since the inception of Bitcoin, people have been referring to BTC as a safe-haven asset. The term is confusing. What risks are being avoided exactly here? From an asset price perspective, Bitcoin and the cryptocurrency market are still risk assets and price performance is entirely dependent on macro liquidity conditions.

The first chart here is a comparison of total cryptocurrency market cap growth and global M2 growth, and the second chart is a comparison of total cryptocurrency market cap and SP500 performance.

These charts show a strong correlation, but where does this correlation come from?

Crypto is Risk Asset

It comes back to the question of what cryptocurrency really is.

Bitcoin was originally invented as a P2P electronic cash and payment protocol. The biggest value propositions of Bitcoin are: (1) its fixed supply; (2) the Lindy Effect and branding effect of being the first and oldest cryptocurrency; (3) its community’s adoption of a conservative development path. Therefore it has the opportunity to replace physical gold and become a safe medium for storing value in the digital world.

With the birth of Ethereum, cryptocurrencies have been given more functions. Crypto is used as fuel for transactions in the digital world, as every Ethereum transaction needs to consume ether. Additionally, it becomes a placeholder for future value accrual. equity token, a credential to enjoy the future growth of a decentralized platform. Crypto is money, fuel and equity. So the price performance of the cryptocurrency market will depends not only on the state of chain economic activities but also the overall market liquidity. Market liquidity determines how much water flows into the pool, while on-chain economic activity determines how much demand we really have for cryptocurrencies.

We believe that cryptocurrency market will be further specialized into different sectors. Different cryptocurrencies will show different market dynamics because the factors that drive the economic activities and usage of each will be different.

A Potential Decouple from Equity?

If Crypto is Macro, does this mean crypto will move exactly in line with the equity market?

While we will be closely watching for macro shock events that can also heavily impact the crypto market, crypto may have a different rhythm in terms of “bottoming” from the equity market. Here we will list several lines of thinking for this:

• Compared to crypto where onchain activities are heavily affected by price, the equity market will be further and more vulnerable to declining earnings, if there is going to be recession, an effect also known as the Davis double play.

• The crypto market has been more rapidly and thoroughly deleveraged than the equity market. Whoever is over leveraged would have been bankrupt by now.

• Some tokens have unique usage scenarios and clear supply and demand structures that make them more prone to have independent market dynamics.

We believe that these different rhythms of bottoming will bring some trading opportunities. At the same time, we also think that the divergence within cryptocurrencies will present some opportunities.

The main reason for this divergence is the different supply and demand structures of each cryptocurrency.

For example, on the right chart is a comparison of GST,  the utility token of STEPN, to BTC’s performance in 2022. GST is the utility token any player would need to upgrade or breed their “shoes” (the “means of production”) in the game. It is also the output of production, meaning players use shoes to produce more GST. In the early stage of the game, a large number of new users come in and the supply exceeds the demand; in the late stage of the game, a large number of users produce GST and need to sell it to cash out, and there is a lack of new users entering, so the supply greatly exceeds the demand. BTC does not have this short period of massive demand increase and decline in 2022, leading to their inconsistent price trends.

Another example is BNB vs. BTC. As we mentioned in our Q3 market commentary, BNB is currently one of the few tokens that is fully liquid and that has a sustainable positive cash flow to buy back and burn. Its supply will keep decreasing until it reaches the minimum amount set by the team. The positive impact of such a sustainable deflationary design on BNB's price can also be seen in its divergence with BTC performance in certain periods.

However, the positive cashflow on BNB is mainly driven by the income from its centralized exchange, which entails a different risk for BNB than other more decentralized tokens.

Another example is “High FDV, Low Float” token. “High FDV, Low Float” tokens refer to tokens that have a very high valuation, or FDV, at the time of the initial offering, usually in the bull market, but the initial circulating supply is very small, therefore the low float. For these types of tokens, there will usually be a four-year vesting period, so there will be constant selling pressure from unlocking in the next three years. If the project can't create sustainable demand for their tokens during the unlock, their performance will be relatively poorer than tokens with less selling pressure.

So, if one thinks we are currently at the bottom and thinking about what to buy, the most important thing is to think about what the token's supply and demand structure will look like in the future.

Here we have listed some of the tokens with the lowest and highest inflation rates for the coming year.

A low inflation rate does not mean it is worth buying. Likewise, a high inflation rate does not mean the token is necessarily not worth buying. An important concept is the escape velocity, which we wrote about in Q3, we need to think whether the demand generated by the token can outrun its inflation rate during the trading cycle.

To summarize, we think it is now a better time to enter in the medium to long term. We should not do nothing now, but we will be closely watching for macro trends as well , as there is still a lot of uncertainty in 2023 on a macro level.

In the upcoming section, we will explore the dynamic shifts and longstanding properties of the technological landscape within the realm of crypto.

NOTES AND DISCLAIMERS:

This document and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. Responses to any inquiry that may involve the rendering of personalized investment advice or effecting or attempting to effect transactions in securities will not be made absent compliance with applicable laws or regulations (including broker dealer, investment adviser or applicable agent or representative registration requirements), or applicable exemptions or exclusions therefrom.

This document, including the information contained herein may not be copied, reproduced, republished, posted, transmitted, distributed, disseminated or disclosed, in whole or in part, to any other person in any way without the prior written consent of Smarti Labs Management, L.P. (together with its affiliates, “Smrti”). By accepting this document, you agree that you will comply with these restrictions and acknowledge that your compliance is a material inducement to Smrti providing this document to you.

This document contains information and views as of the date indicated and such information and views are subject to change without notice. Smrti has no duty or obligation to update the information contained herein. Further, Smrti makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

*Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Smrti believes that such information is accurate and that the sources from which it has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Moreover, independent third-party sources cited in these materials are not making any representations or warranties regarding any information attributed to them and shall have no liability in connection with the use of such information in these materials. *

©2023 Smarti Labs Management LLC

We hosted our first annual general meeting with our investor and friends in January 2023. In this series, we will share some top takeaways from our reflection and thoughts on cypto in 2023 and beyond.

/@0x992

The idea of Smrti Lab started in June 2021 and we officially launched on Oct 1st, 2021. This AGM marks our first whole fiscal year. Bitbear and I have been head-down navigating the crypto investment since 2017 when we focused on crypto at Bob Xu’s family office and ZhenFund respectively. 2022 marked the 5th year that we remain flexible, open-minded, and nimble in the industry. This cycle is the 4th crisis (2017/9/4, 2018/12, 2020/3/12, and 2nd half of 2022 after the UST crash) that we have been through.

2022 is a turbulent year for all of us. Nasdaq 100 has dropped nearly 33% in 2022 and Dow Jones Industrial Average lost more than 20%, while the world's best-known cryptocurrency, Bitcoin, shed almost 60% of its value.

In crypto world, Black Swan and Grey Rhino simultaneity happened: LUNA UST stablecoin collapse, FTX Fraud, Greyscale GBTC in debt trouble, Binance FUD, etc. Many people have lost faith in the industry. Although this year has been dramatic and turbulent, we still believe in the promise of a decentralized, open-source, money lego smart contract platform.

On behalf of the entire team at Smrti Lab, we would like to express our heartfelt gratitude for your support over the past year. Your support has allowed us to continue pushing the boundaries of blockchain and crypto public goods, and we are deeply grateful for your trust in Smrti’s vision and mission. We are excited to continue working together as we move into the future and make a positive impact on the world.

/@0x992

2022 is the year of The Great Deleverage.

In May, LUNA and UST collapsed. In July, 3AC filed for Chapter 15 bankruptcy. Meanwhile, Celsius filed for Chapter 11 bankruptcy. In November, FTX suspended withdrawal and seek Binance for help. 3 days later, FTX filed for Chapter 11 bankruptcy. Blockfi also filed for Chapter 11 bankruptcy in late November. Genesis Lending filed for Chapter 11 bankruptcy in Jan 2023.

One major exchange (FTX) with 32 Billion private valuations filed bankruptcy, and 4 CeFi lending (Celsius, BlockFi, Genesis Lending, Voyager) filed bankruptcy. More than a million traders have lost funds in CEX and CeFi lending platforms. People lost confidence in last-standing CEXes and tried to withdraw funds to safer platforms or cold storage.

The cascades of panic selling and liquidation events started on May 8th, 2022, and had not stopped until recently. We anticipate more regulation resources in the states will focus on the centralized crypto companies since retail lenders and traders are involved. To protect retail users , we will eventually see a check and balance on custodians and trading services.

However, what does not kill you will only make you stronger. These are stress tests of a highly efficient permission-less market that our industry aims to build after all.

The Top 10 tokens on Coinmarketcap have been down 80% on average for 2022. With the market sharing a similar path to the Dotcom Bubble in 2001, the question left for us is: How do we manage to invest after the Dotcom bubble/ 2022 Crypto bubble? The winning portfolio over the next cycle (3-7 years) will look drastically different than the existing winners. Most of the future top 10 tokens have not been born yet.

From Google trends, the sentiment is still pessimistic, but the traffic shows interest level is decelerating but it’s stronger than the last bear cycle before DeFi summer.

At Smrti Lab, we constantly ask ourselves one question: Where are we in the cycle?

/@Bitbear

Where is the bottom: Structural Bottom vs Historical Bottom

To know where we are at the cycle , it is more important to consider what type of market we are in: whether we are still in the middle of a long-term directional market or are about to be in a range-bound market. This determines two different kinds of bottoms: Structural Bottom vs. Historical Bottom, which is the beginning of a long bull market.

Using the last 90 years of the SP500 as an example, we can see that there were three periods in history that were decades long range-bound markets: 1929-1954, 1966-1982, and 2001-2010.

If you bought the SP500 in 1929; you might not make profit until 1954; if you bought it in 1966, it will be until 1982; if you bought Intel at the highest point in August 2000, when will you break even? The answer is never, at least until now.

So the premise of investing with a HODL mentality is to recognize whether we are at the beginning of a long cycle, or whether we are in a stagflationary market like the 1970s.

What are the factors that determine a structural bottom, or a historical bottom?

Structural bottom happens due to changes in market structure. I summarized three factors that could contribute to a structural bottom:

Seller Exhaustion: Selling pressure drastically decreases compared to previous periods.  In this type of bottom, the market participants who want to sell or who were forced to sell have already sold. There is limited inventory or incentive for more selling activity.

Market Sentiment: The market is full of despair. No one wants to buy.

The Degree of Deleveraging: Whether it’s equity markets or crypto, bull markets mainly benefit from credit expansion, and the bust of the bubble is often accompanied by intense deleveraging. A fully deleveraged market often also means the bottom of the market.

Structural bottoms can happen in any types of market, whether it’s a long term directional market or a range-bound market.

Historical bottoms are also part of structural bottoms. What makes historical bottoms different is that, in addition to the three factors we just mentioned, historical bottoms tend to happen at the beginning of long-term secular trends.

What is a long-term secular trend? We can all say that, since 1990s, the U.S., if not the world, has been in the midst of several long term secular trends: increased productivity and lower production costs due to globalization and technological development, a sustained low interest rate environment, and adequate supply in the labor market, etc.

We believe that one of the most important questions in thinking about the market today is whether the long-term secular trends that we have been in for the past few decades are facing a change. If conditions change, then what we face next is not the start of another directional market, and the traditional investment philosophy, such as “HODL”, will run into a lot of problems. It is possible to hold for decades to just reach a breakeven.

So is the market now at a structural bottom?

Consider the first factor that leads to a structural bottom, Selling Exhaustion. We will use Bitcoin as an example here.

The chart on the left shows how many holders are bearing the opportunity cost of holding relative to the current price, and the opportunity cost they are bearing is increasing with each day of holding. The price is essentially flat from June 2022 to now, but this indicator is decreasing, which means that the total opportunity cost of holding is increasing and the overall holding behavior is increasing.

The graph on the right side of the chart refers to how many holders are spending, or selling, relative to the current market value. We can see that from the top of the bull market in November 2021, to July 2022, prices fell, and so did the indicator Dormancy Flow, indicating that the selling behavior of holders during that time was outweighing the effect of the same percentage of market capitalization reduction. From July 2022 to the present, with prices essentially flat, the indicator has increased, indicating that the selling behavior has decreased.

Another one of my favorite metrics is the cost of long-term holders relative to the cost of short-term holders.

On the left is a chart form our Q2 letter in June 2022, when the long-term holder cost was around 70% of the short-term holder cost; now, in the chart on the right, this indicator is currently 1.25, which means that buying now is 80% of the long-term holder cost. We can see that historically bottoms are in when this indicator was above 1.2. Although this does not mean that the price will not fall below the current price, or the previous lows in the future, but for any investor looking to buy at a low cost in a longer timeframe, now is a good time to buy.

Crypto is Macro

Although the indicators point to now is a good time to buy, but this does not mean that the future price will not fall below the current price. This is because the market is not just determined by holder. The growth in holder number or overall holding behavior only means a decrease in selling pressure, but a market recovery needs buyers.

Where do the buying orders come from? We believe that buying in a bear market depends on two things: 1. Current valuations are low enough to be attractive to investors, which means the cost of buying in the near term is low relative to long-term holders. 2. Second, and most importantly, we need a recovery in market liquidity.

Since the inception of Bitcoin, people have been referring to BTC as a safe-haven asset. The term is confusing. What risks are being avoided exactly here? From an asset price perspective, Bitcoin and the cryptocurrency market are still risk assets and price performance is entirely dependent on macro liquidity conditions.

The first chart here is a comparison of total cryptocurrency market cap growth and global M2 growth, and the second chart is a comparison of total cryptocurrency market cap and SP500 performance.

These charts show a strong correlation, but where does this correlation come from?

Crypto is Risk Asset

It comes back to the question of what cryptocurrency really is.

Bitcoin was originally invented as a P2P electronic cash and payment protocol. The biggest value propositions of Bitcoin are: (1) its fixed supply; (2) the Lindy Effect and branding effect of being the first and oldest cryptocurrency; (3) its community’s adoption of a conservative development path. Therefore it has the opportunity to replace physical gold and become a safe medium for storing value in the digital world.

With the birth of Ethereum, cryptocurrencies have been given more functions. Crypto is used as fuel for transactions in the digital world, as every Ethereum transaction needs to consume ether. Additionally, it becomes a placeholder for future value accrual. equity token, a credential to enjoy the future growth of a decentralized platform. Crypto is money, fuel and equity. So the price performance of the cryptocurrency market will depends not only on the state of chain economic activities but also the overall market liquidity. Market liquidity determines how much water flows into the pool, while on-chain economic activity determines how much demand we really have for cryptocurrencies.

We believe that cryptocurrency market will be further specialized into different sectors. Different cryptocurrencies will show different market dynamics because the factors that drive the economic activities and usage of each will be different.

A Potential Decouple from Equity?

If Crypto is Macro, does this mean crypto will move exactly in line with the equity market?

While we will be closely watching for macro shock events that can also heavily impact the crypto market, crypto may have a different rhythm in terms of “bottoming” from the equity market. Here we will list several lines of thinking for this:

• Compared to crypto where onchain activities are heavily affected by price, the equity market will be further and more vulnerable to declining earnings, if there is going to be recession, an effect also known as the Davis double play.

• The crypto market has been more rapidly and thoroughly deleveraged than the equity market. Whoever is over leveraged would have been bankrupt by now.

• Some tokens have unique usage scenarios and clear supply and demand structures that make them more prone to have independent market dynamics.

We believe that these different rhythms of bottoming will bring some trading opportunities. At the same time, we also think that the divergence within cryptocurrencies will present some opportunities.

The main reason for this divergence is the different supply and demand structures of each cryptocurrency.

For example, on the right chart is a comparison of GST,  the utility token of STEPN, to BTC’s performance in 2022. GST is the utility token any player would need to upgrade or breed their “shoes” (the “means of production”) in the game. It is also the output of production, meaning players use shoes to produce more GST. In the early stage of the game, a large number of new users come in and the supply exceeds the demand; in the late stage of the game, a large number of users produce GST and need to sell it to cash out, and there is a lack of new users entering, so the supply greatly exceeds the demand. BTC does not have this short period of massive demand increase and decline in 2022, leading to their inconsistent price trends.

Another example is BNB vs. BTC. As we mentioned in our Q3 market commentary, BNB is currently one of the few tokens that is fully liquid and that has a sustainable positive cash flow to buy back and burn. Its supply will keep decreasing until it reaches the minimum amount set by the team. The positive impact of such a sustainable deflationary design on BNB's price can also be seen in its divergence with BTC performance in certain periods.

However, the positive cashflow on BNB is mainly driven by the income from its centralized exchange, which entails a different risk for BNB than other more decentralized tokens.

Another example is “High FDV, Low Float” token. “High FDV, Low Float” tokens refer to tokens that have a very high valuation, or FDV, at the time of the initial offering, usually in the bull market, but the initial circulating supply is very small, therefore the low float. For these types of tokens, there will usually be a four-year vesting period, so there will be constant selling pressure from unlocking in the next three years. If the project can't create sustainable demand for their tokens during the unlock, their performance will be relatively poorer than tokens with less selling pressure.

So, if one thinks we are currently at the bottom and thinking about what to buy, the most important thing is to think about what the token's supply and demand structure will look like in the future.

Here we have listed some of the tokens with the lowest and highest inflation rates for the coming year.

A low inflation rate does not mean it is worth buying. Likewise, a high inflation rate does not mean the token is necessarily not worth buying. An important concept is the escape velocity, which we wrote about in Q3, we need to think whether the demand generated by the token can outrun its inflation rate during the trading cycle.

To summarize, we think it is now a better time to enter in the medium to long term. We should not do nothing now, but we will be closely watching for macro trends as well , as there is still a lot of uncertainty in 2023 on a macro level.

In the upcoming section, we will explore the dynamic shifts and longstanding properties of the technological landscape within the realm of crypto.

NOTES AND DISCLAIMERS:

This document and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. Responses to any inquiry that may involve the rendering of personalized investment advice or effecting or attempting to effect transactions in securities will not be made absent compliance with applicable laws or regulations (including broker dealer, investment adviser or applicable agent or representative registration requirements), or applicable exemptions or exclusions therefrom.

This document, including the information contained herein may not be copied, reproduced, republished, posted, transmitted, distributed, disseminated or disclosed, in whole or in part, to any other person in any way without the prior written consent of Smarti Labs Management, L.P. (together with its affiliates, “Smrti”). By accepting this document, you agree that you will comply with these restrictions and acknowledge that your compliance is a material inducement to Smrti providing this document to you.

This document contains information and views as of the date indicated and such information and views are subject to change without notice. Smrti has no duty or obligation to update the information contained herein. Further, Smrti makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

*Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Smrti believes that such information is accurate and that the sources from which it has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Moreover, independent third-party sources cited in these materials are not making any representations or warranties regarding any information attributed to them and shall have no liability in connection with the use of such information in these materials. *

©2023 Smarti Labs Management LLC