DEXTF analyzed by the suits*

Written by @SoyYolo3 and @Malbec

TL;DR

• DEXTF is a decentralized governance token with a non-anonymous team
• It is set up to be ‘the’ asset management protocol (the Blackrock of traditional finance)
• Huge catalysts coming up
• Price Target: $374 for 2023 (implying 205x from current levels)

What is it?

DEXTF aims to be DeFi’s main DECENTRALIZED asset management protocol (the Blackrock of traditional finance)

It is a protocol led by a non-anonymous team with a stellar background, still mostly under the radar in the DeFi space, and ready to make a splash.

For DEXTF holders: is a decentralized governance token that can accrue the majority of the platform fees (together with Portfolio Managers). Fully transparent and fair distribution process.100mm total supply without private or public sale.

For DEXTF users: One coin that rules them all. Buy one coin and get exposure to many. No more shilling gazillion coins.

Current holders

Right now there are less than 1,000 holders (at the time of this writing). You can check them here. It is growing fast; there were only 250 holders 2 weeks ago. Basically nothing. Which tells us that not a lot of people have discovered the DEXTF project yet. That’s probably why its Mkt Cap is currently just $26mm.

Team

A non anonymous team with a stellar background:

Nicola Lanteri, CEO, +12yrs working for ANZ(#2 Bank in Australia by assets)
Mario Aquino, Co-Founder and former McKinsey Partner
+ a Team with extensive asset management and technology experience, including Phd’s and former Google engineers

Advisor: @Alex Kruger has recently joined the Team to help scale up the Protocol. Clearly he sees some potential here too

Current Valuation

Current value 26.1MM/185MM FD @ $1.82

Valuation of DEXTF

(finance savvy readers might want to skip some of this)

Valuations are based on future performance of a protocol (micro) and the environment (macro). Assumptions are the most difficult aspect of it.

For DEXTF we had to make two fundamental assumptions: expected revenues and market size.

The market size is probably the most difficult assumption of all. DeFi TVL is still growing exponentially: it “only” grew 40x in the past 12 months and Crypto itself is growing at a very fast pace. Our approach was to first look at crypto’s total market cap (~$1.4 tn ) and DeFi TVL (~$40bn and 3% of total market cap). TVL growing to 25% or 50% of crypto’s market cap shouldn’t be a problem given the strength of this ecosystem. The second analysis we performed was on the size of the US equity market cap ($30tn). Based on strong growth of crypto in general and DeFi TVL in particular we expect TVL to be $800mm by 2023, a 20x growth from current levels, and approximately 57% of current crypto market cap. For 2040 this market should be at $6tn (only 20% of the US equity market today!).

On the size of the ETF markets, we do know that the ETF markets represent $5tn of the US equity market, that is 16% of the total size. That percentage could also be expected in DeFi as a percentage of TVL. We assumed that DEXTF will be managing 1/10 of the 16% total TVL given the current competition and its early mover advantage, or the equivalent of 1.6% of DeFi TVL by 2023, decreasing to 1% in 2040 due to additional competition. The amount that DEXTF manages is called Assets Under Management or AUMs.

Now with the potential size of the protocol defined, its expected market revenues are easier to project. Management fees would be around 0.3% of total AUMs. Structured Notes fees are usually 1% to 2% and we have assumed revenues from this source to be 35% of total revenues based on our experience in traditional finance. Structured notes are a very profitable source of income for banks and they should be the same for this protocol.

Using our assumptions we will now use the two most commonly used valuation models in DeFi which are:

1. Price/Sales(P/S) Comparable
2. Dividend Discount Model (or DDM)

1. Price/Sales Comp
This model is simple and nice because it allows to easily compare different protocol valuations. P/S estimates future sales of a protocol to arrive at a multiples factor. Now, what factor? Blackrock publishes one for the US equity market, which currently sits at 22x. At Token Terminal you can see current DeFi protocols multiples. We selected the blue chip protocols with 2 or more years in existence and calculated the average ratio at 81.5x. The difference between both (22x and 81.5x) is explained by the higher potential growth of DeFi and the maturity of the market and protocols.

We applied the valuation at two points in time: 2023 (when the protocol multiple would be comparable to current blue chip DeFi P/S ratio) and 2040 (when DeFi would be more comparable to the current US equity market). Our findings ⇒

2. Discount Dividend Methodology (DDM)
DDM is a popular approach as well. Starting from expected Dividends or Revenues you reach a valuation by assuming the growth rate of that Dividend going forward, and discounting that cash at the cost of capital to get to its present day value.

In Finance we use a nice clean formula for a perpetuity to calculate this:

Now the tricky part… What are the growth rates and the discount rates? For growth we assumed 6% through 2023 and 3% through 2040. Both are conservative given US (and global) historical growth rates and the potential growth of DeFi. For the discount rate through 2023 we used a cost of capital based on the yield of other DeFi platforms (a common approach) and for 2024 and forward we used the projected cost of capital for the US equity market, expected at 4.8% (based on analysis by professor Damodaran from NYU) Using these assumptions our valuation is: ⇒

Ok, two models and two prices. What is the “actual” price target? Probably something in the middle. These valuations never reach the same price so the concept of blended price is used, that is… an average. For DEXTF that is:

WOW! So I should make 205x times my money pretty soon??? Hold your horses. This means that DEXTF has the potential to reach this valuation and definitely has an interesting upside given all the qualitative and quantitative aspects discussed in this paper.

Spreadsheet to our model.

Competition

There are five main competitors: Token Set, Enzyme, dHedge, PieDAO and Indexed. We will follow-up with a valuation for these five in the near future. See comparative table below highlighting the attributes of each protocol.

Source: DEXTF

Potential Catalysts

1. New tokenconomics started on Feb 15th

2) New liquidity pools: today DEXTF is available in Uniswap and could be added to Sushi dinner very soon

3) Listing in Major exchanges (Binance, FTX, etc)

4) Token Portfolios could be used as a collateral in major lending platforms

5) Cover or Nexus Mutual protocol could provide insurance for DEXTF

6) The most important one: enabling structured products. They will be the first protocol that offers SP in DEFI

7) New UI (user interface) should improve the look and feel of the protocol significantly

New Products/Under development

1. New tokens: 63 assets are accepted today, with new tokens being added every week
2. Capital Protected Structured Tokens (CPST)
3. Decentralized Structured Tokens (DEXST)

How/Where can you buy DEXTF?

Unfortunately, it is not listed in any exchange yet. So in order to buy DEXTF you would have to:

1. Buy ETH in your favorite exchange
2. Transfer ETH to your MetaMask Account
3. Go to Uniswap
4. Input the token address: 0x5f64ab1544d28732f0a24f4713c2c8ec0da089f0
5. Perform two transactions Approved and Swap your ETH for DEXTF
6. Add DEXTF to your Metamask account. You can use CoinGecko
7. Track the price of DEXTF in DexTools.io

Risks

Biggest risk for any protocol is adoption. We do believe there is value in this protocol, a clear market need, and an uncrowded space, with execution being key. Despite the impressive experience of the team a lot rests on their shoulders.

For the early investor: it is highly illiquid and volatile given the number of current holders. We expect this to change soon, but it’s not for the fainthearted.

Although the smart contract risk always exists, this protocol has been audited.

Disclaimers

I bought/hold DEXTF tokens
This is not an Investment advice
DEXTF didn’t pay me or ask me to write this

* Suits, if still not understood, makes reference to us still needing a tie for our daily job.