The Path is a voyage PoF is onboarding through the second quarter of 2021 where we are purely capitalising on hype. You can read our original thesis in this journal.
Our target timeline is 1 to 6 weeks per token.
Continuing on from our previous investments, this next iteration will be running simultaneously with the previous leg of the Journey – you can read about that here.
This particular asset has backing from a few key players that we believe will boost the hype and speculation surrounding the project and its token.
As always, risk management when investing in this kind of hype driven asset is imperative – we are only allocating a small percentage of our capital, specifically for the purpose of capitalising on the short-term momentum of these tokens.
Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.
Introduction
Currently, trading stablecoin pairs on AMMs such as Raydium is inefficient due to high slippage and fixed fees – this is detrimental when demand is high and results in wasted opportunity for liquidity providers.
Mercurial Finance is a platform for facilitating low-slippage swaps for stablecoin pairs, and aims to provide a system for more efficient capital utilisation on the Solana blockchain. The Mercurial AMM (automated market maker) vault will provide users with more efficient options for swapping stablecoins, FOREX pairs, improve profits from liquidity providing, and present extra opportunity for earning through external lending.
For a very short summary, read the TLDR below 👇
TLDR
Mercurial Finance (MER) aims to improve stablecoin capital efficiency on the Solana blockchain.
MER will launch “pre-sale” on AcceleRaytor by Raydium. The requirement is to stake 500 or 50 RAY to gain access. There are 2 pools – one for participants who have staked 50+ RAY (max allocation 200 USDC), and one for participants with 500+ RAY staked (max allocation 600 USDC). Participants of the RAY500 pool will also be eligible to enter the RAY50 pool.
AcceleRaytor pools will go live on Wednesday 19th May, 2021 at 1pm BST for 4 hours.
A MER-USDC liquidity pool will opened on Raydium DEX on Friday 21st May at 2pm BST.
FTX will list MER on Friday 21st May at 2pm BST.
A MER-USDT pool will be available for trading on gate.io on Friday 21st May at 2pm BST here.
MER will have a fixed initial price of 0.125USDC; we are looking to get in for <$1 with a target price of $5.
We will be participating in the FTX IEO, AcceleRaytor pools (both) and we’ll put the remainder of the capital to buy at the FTX listing on the 21st of May.
The following section is a more detailed overview of the project and our logic behind the participation.
Stablecoin Liquidity
Stablecoins such as USDC and USDT represent a large portion of the DeFi ecosystem of any blockchain. Incentivising liquidity in this area is important for the health of the Solana DeFi economy – Mercurial Finance is looking to improve the profitability of deposited stablecoins through their innovative Dynamic Market Making Vaults, streamlining participant experience and adding further incentive for participants to inject liquidity into the ecosystem.
MER Token
MER is the governance token of Mercurial Finance and will have a max supply of 1,000,000,000 MER (1 Billion), with long-term distribution spread out over 4 years:
Seed Round (20%): 3 year linear with 1 year lock up
Private Sale (5%): 10% at token generation event – linear for 2 years after one month
IEO + Liquidity Provisions (5%): 1% to IEOs across platforms
Liquidity Incentives (30%): 40% each year – halving each year afterwards
Team & Advisors (20%): 4 years linear with 1 year lock up
Ecosystem/Reserves (20%): 20% a year for 4 years
The lockup period portrays an attractive value proposition for the time-period we would be looking to capitalise on (1-6 weeks). From this table we can deduce that roughly 85% of the 1 billion tokens (850 million) will be locked up for a minimum of 4 weeks.
The value accrual proposition for the MER token is as follows:
MER token holders will be paid a portion of the swap fees from the vault, subject to decisions made by the DAO. Occasionally MER tokens will be burned instead of distributed.
A portion of the interest accrued from the vault yield programs will be paid to MER holders.
MER will be the collateral token posted for the minting of synthetics and stablecoins – in the future Mercurial has suggested they could create their own stablecoin (mUSD), providing further utility for MER.
All of these factors incentivise token lockup, simultaneously reducing circulating supply and creating demand.
DAO (Decentralised Autonomous Organisation)
Mercurial will feature decentralised, autonomous governance for their vaults that will handle all decisions such as determining fees, distribution/burning of fees, capital deployment, yield program approval and loan-to-liquidity ratios for vaults. The MER token will also act as the governance token, entitling holders to voting rights on these subjects.
FTX Initial Exchange Offering
4,000,000 MER (0.4% of supply) will be offered in an FTX IEO on Thursday 13th May from 2pm till 3pm (BST). Guidelines are as follows:
KYC level 2 is required, and participants must have 150 FTT staked at least 24 hours before the IEO.
1,000 accepted tickets will be available with 4,000 MER allocated to each ticket, and allocations will go to the highest bidders. Maximum bid will be 500 USDT + 5 FTT per ticket (~$800 at the time of writing for 4,000 MER – an implied price of $0.20 per MER).
150 staked FTT entitles participants to purchase 1 ticket, 1,000 FTT 2 tickets, 10,000 FTT 3 tickets –additional tickets are available with more staked FTT but realistically we don’t expect many participants to have this much FTT in the system.
Successful bids will have their MER-IEO subaccount automatically updated with their MER tokens, which will be unlocked once MER is listed on FTX.
You can join FTX and enjoy a discount on trading fees through this link: https://ftx.com/#a=proofoffuture
MER will be listed on FTX on Friday 21st May at 2pm BST – that is where we plan to “buy the listing” rather than deal with the slower mechanics of IDOs.
The initial capital requirement (150 FTT, about $9,000 at current prices) means that this will be out of reach for many investors – we will be participating in the IEO. There’s a questionable chance of success, anyway. We experienced this with the OXY IEO – despite putting in the maximum allowed bid, we didn’t get an allocation.
We believe that the user experience for initial offerings is substantially more streamlined and user friendly, and therefore we expect that participation will be higher than that of the previous IDOs we have covered in the past (STEP in particular).
It is worth noting, US citizens will not be able to participate in the IEO, or trade MER on FTX at any point due to regulations.
AcceleRaytor Public Raise
Similar to MEDIA, MER will have a public raise on AcceleRaytor on Wednesday 19th May, 2021 at 1pm BST that will consist of 2,000,000 MER tokens (0.2% of supply) shared across 2 pools. The fixed price for the tokens will be 0.125 USDC for a total raise of $250,000. Both pools will be open for 4 hours till 5pm BST.
RAY50 & RAY500 Pool
As the name suggests, to be eligible for the RAY50 pool participants must stake 50 RAY on Raydium one week before the pools open (Wednesday 12th May, 1pm BST is the deadline). Total raise for this pool will be 1,000,000 MER, and the maximum allocation will be 200USDC per participant.
To be eligible for the RAY500 pool, participants must stake 500 RAY (funnily enough) under the same conditions as the RAY50 pool. An additional 1,000,000 MER is available, and the maximum allocation will be 600USDC for this pool. RAY500 participants are also eligible to participate in the RAY50 pool, bringing their maximum effective allocation up to 800USDC if they were to invest in both pools.
As always, these pools will be (heavily) over-subscribed and so the Guaranteed Proportional Fixed Price Model will be implemented to ensure fair allocation – there is an example of how the Guaranteed Proportional Fixed Price Model works in our previous report for MEDIA, here.
We will be participating in both pools, because why not?
Raydium Initial DEX Offering (IDO)
In exactly the same manner as MEDIA, MER will become available for swapping in a MER-USDC liquidity pool on Raydium on Friday 21st May at 2pm BST. The fixed starting price per token will be 0.125 USDC.
Gate.io Listing
2,000,000 MER was offered in a gate.io IEO (initial exchange offering) on the 13th of May; subsequently, in addition to the Raydium DEX and FTX listings, a MER-USDT pool will be available for trading on Friday 21st May at 2pm BST here. We will still be using FTX to purchase MER, however we believe that this additional listing will boost the hype and provide another more user friendly interface to acquire MER tokens.
Conclusion
These Solana-based hype trains will not be around forever and so we aim to capitalise as much as possible on them, making sure that we are managing both our risk and our expectations. For this particular IDO we will be allocating 15% of the capital that we have set aside for Solana Season, which in turn is just a small percentage of our overall capital.
FTX Listing Update
Unfortunately the MER launch happened to coincide with BTC losing support due to the correction. The correction has also invalidated our Solana IDO hype theory.
We got into MER on FTX a bit higher than anticipated at $1.43. We closed our position at $0.93 for a 35% loss.
As stated the whole way through the Journey this is capital we can fully afford to lose, as part of the Solana hype theory we had been capitalising on.