[INVESTMENT] Purchase token - Shadow (SHDW)

Hey guys, I want to introduce the SHWD token and propose that we invest in it.

For those who don’t know it, SHWD is the token of GenesysGo, one of the main RPC provider on Solana. Instead of providing simple RPC services like many others, the team went above and beyond and laid out a very ambitious roadmap.

To avoid repeating too much here is a link to their comprehensive guide about GG and SHDW that they posted before the IDO. I also recommend to have a read at the other medium articles for more details

In a nutshell:

  • GenesysGo is one of the main provider of RPC infra to Solana
  • Team is super strong and well respected within Solana community
  • With the idea of transitioning to a DAO governance structure, they launched the Shadowy Super Coder NFT collection in November 2021
  • With the mint + royalties + validator revenue (every RPC also runs a validator) they provide RPC access for free to a large number of protocols on Solana
  • They are now building the Shadow Protocol: Shadow Network (decentralized RPC operators) + Shadow Drive (similar to Arweave but built to scale well with Solana), with SHWD as native token
  • SHWD is a utility token, clients pay it to use the Shadow Drive, participants in the Shadow Network (called Shadow Operators) need to stake some to participate, and similar use cases… overall it is linked to the success/adoption of the Shadow Protocol
  • You can find detailed tokenomics in link above, an innovative aspect is that 50% of the supply is reserved for NFT holders, dropped only if the NFT is staked and on a daily vesting schedule (10,000 SHWD are vested linearly over a year + 3,000 bonus if NFT is staked for consecutive 12 months)

Overall I really like the project and team (disclaimer: I own a SSC NFT and I have it currently staked) and I’m bullish on SHWD. During the IDO they raised around $50m with SHWD at $1.70, the coin peaked to around $3 and in the past weeks dumped in line with the market, sitting now at around $1, which I think is a good entry point.

The team seems very committed and they are also planning to launch an IDO platform (powered by SHWD). Moreover, SHWD can be lent on platforms such as Francium for currently 15% , or even used for a more sophisticated carry trade vs the NFT which I described here. Currently a virgin SSC goes for ~15k vs 13k to buy 13,000 SHWD but the opportunity may rise again if SHWD pumps and SSC NFT price remains sticky.

Overall as cons I see mainly the sell pressure coming from the NFT drop (though diluted over a year, leaving enough time for the protocol to properly develop), and obviously the adoption/delivery risk from the team.

All things considered I propose:

  • buy $25k worth of SHDW (less than that becomes very little vs portfolio, could be more so lmk what you think). If price impact is high then would split the order across a few days
  • lend SHDW either on Francium or Tulip, whichever highest
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I love the project and i think that some infrastructure player a good play for our portfolio.

Furthermore one good news they will support Solana Pay: https://twitter.com/jordaaash/status/1489444625924472833

In addition to the 25k, we can also buy one of their NFTs (https://www.magiceden.io/marketplace/shadowy_super_coder_dao) which yields approx 12/13k tokens via staking the NFT. Current price is 100 SOL, which @115$ makes the tokens “acquired” via the NFT with a slight discount in the range of 5/10%

I like the infrastructure play side of things. However as we have seen with filecoin, utility coins around data storage are not a good speculative play (as much as I love IPFS and have been following it from the very beginning). The entire point of data storage is to drive costs down as far as possible and make data storage a commodity. This played out with filecoin where people jumped on the ICO thinking the tokens would appreciate, but in reality it just nose-dived as the cost of data storage keeps getting lower. I am concerned SHWD will follow the same path.

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Fair points! I agree with the fact that the entire point is to drive storage down. Looking at valuations:

  • SHWD $200m FDV (couldn’t find mkt cap)
  • Arweave $2bn mkt cap, $2.7bn FDV
  • Filecoin $3.6bn mkt cap, $44.7bn FDV

So SHWD is still very tiny but I would consider it’s not only a storage solution but also decentralized RPC network + other utilities (eg IDO platform), all built on the token.

Moreover, there is another aspect with regard to NFTs. Currently all (afaik) NFTs on solana are launched using Metaplex which by defaults stores data on Arweave (this was a non-negligible part of their flow during the NFT boom last year). However, Arweave is simply not built for the throughput of Solana and this can result in a lot of issues for instance during the initialization and upload of the NFTs (we experienced this ourselves). I don’t think it’s far-fetched to see Metaplex switching the default to Shadow once it’s live, also considering the overall support it got from top members of Solana community and the fact that it’s Solana-native

@solbricklayer definitely. We can check how much SHWD has already been claimed for a given NFT here. Overall I think the NFT is also worth more than simply the vested tokens it has left (ie it will be likely worth more than 0 even after all SHWD have been claimed). Would still buy some tokens spot as those through the NFT are released over a full year and can’t be lent

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Yes, it’s probably going to depend how much the RPC side of things weighs in compared to the storage side.
Generally I am bullish. This looks like an important pillar of the solana ecoystem, and therefore we should play a role if it is not already all priced in.

Sounds good. Should we buy some SHWD + an SSC NFT as well? I see the floor at around 85 SOL right now, though it will depend on how many SHWD it has left as well

With the NFTs, you are basically buying an illiquidity/duration discount. If we think we will be holding this position for long enough to redeem the tokens, by all means do it. If we are only thinking of holding the position for a few months, I’m not so certain it will make sense.

agreed. If we buy it, it would be to stake it for 12 months and get the full bonus.

@solbricklayer what do you think?

I think coins + NFT makes sense, as this is more an ecosystem bet than a short term trade, so in my opinion it makes sense to have some exposure to the NFT as well (which can provide both a discount on the token amount + some upside later on if they provide more Benefits to NFT holders + a residual value in the NFT itself)

I agree with the comments and suggestions above. This is an infrastructure play, which might take time to fully appreciate (see filecoin) but is clearly a token with some real underlying value.
I would buy both the token and the NFT. Prices have moved down during the last few days, so I think timing does not look bad right now.

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Perfect, only thing in terms of timing would wait a few more days as would rather entry when there is a small rebound rather than trying to catch the falling knife

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Reopening the thread here → i think this is a good timing to enter (fully or partially)

In terms of exposure, i was thinking that since we have a quite sizeable portfolio probably it does’t make sense for us to get into coins with $25k or so, and in terms of portfolio allocation I would do a minimum of 2/2.5% so that if it goes up (thing that we are all hoping and strong believing) at least the performance has a sizable effect in our bigger portfolio. I remember @PorcoRosso was sharing a similar thought for the VC investments. In short, we should be stronger in our high conviction bets :slight_smile:

ok so let’s say 80k + 1 NFT ?

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yes let’s do that!! totally agree

proposal is up

given the current developments of SHDW, and the protocol becoming a key piece of infrastrucutre to solve some of the NFT-related issues of the chain, I would increase the exposure over the token

Following up on this. Following the same reasoning as LFNTY, SHDW has dumped along with the market but I think fundamentals remain strong. In particular we see already some good traction:

The team will also be live in Lisbon to present a decentralized cloud solution, D.A.G.G.E.R and some other partnership with Metaplex.

I propose we increase our allocation to SHDW. For the NFT there is not a clear plan on any value accrual besides the token vesting which will end in a few months. So I would focus on SHDW alone

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Agree - I think the best would be to use some of our existing SOL holdings and swap them for SHDW to get some beta. For the same reason as for LFNTY, I would spread the swap over some weeks to DCA the entry price