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Today’s Big Stories: 💸 Coinbase notes 🚀 Telegram’s IPO 🤌 Pantera buying up Solana ✅ Ethereum gets cheaper 📈 The return of the crypto VC
Today's newsletter is 1,190 words, a 5-minute read.
Coinbase Sells $1 Billion in Bonds as the Company’s Stock Soars
With the company’s stock up more than 300% this year, Coinbase (COIN) is taking advantage of the moment by selling $1 billion in convertible notes to pay off existing debts and cover corporate costs.
Coinbase also plans to offer a 30-day option to allow the purchase of an additional $150 million of the securities to cover over-allotments.
The notes, which mature in 2030, will be convertible into cash, A-shares of the company’s stock, or a combination.
At that time, Coinbase was left for dead by the ratings agencies, and it’s bonds were trading in junk territory. We wrote:
While the FTX fiasco probably led to an increase in accounts at Coinbase, helping solidify their footing in the US market, the ratings’ agencies aren’t yet buying it.
Currently, Coinbase’s bonds maturing in ‘26, ‘28, and ‘31 are all yielding more than 10% (junk bond territory).
Not helping the company are rating agencies, Moody’s and S&P Global, downgrading the company’s credit. So while equity holders appear to be bullish on the company, the bond market isn’t so sure.
Furthermore, we explained that if you assumed Coinbase wasn’t going to go bankrupt, the trade looked pretty sweet.
As of the end of Q3 2022, Coinbase had ~$5 billion in cash on hand and $3.4 billion of long-term debt.
If we briefly look at the 3.38% Senior Notes due on October 1, 2028, we can see that Coinbase raised $1 billion of these bonds that pay 3.38% interest until 2028.
Right now, these bonds are trading for $0.58 on the dollar, and have been as low as $0.50.
Due to the discount, if you do the math, these bonds are paying ~14% yield. In other words, if you hold these bonds to maturity (five years), you will receive 14% annually. Not bad.
While that trade turned out pretty good, our main point is that you don’t have to go chasing crazy tokens to make respectable money in crypto. Find an area of the market you understand and trade with conviction.
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Telegram’s Potential IPO Leads to Skyrocketing TON Price
Pavel Durov, founder of messaging app Telegram, revealed plans for an IPO in an interview with Financial Times this week. The news sent The Open Network’s Toncoin (TON) price skyrocketing more than 60%.
Digging deeper: Durov, also revealed to FT that the company has “been offered $30bn-plus valuations” from potential investors including “global late-stage tech funds.”
Recapping: TON, a project launched by Telegram in 2017, began as a $1 billion ICO, but was eventually dropped by Telegram after the SEC took issue with the launch in 2020.
While Telegram eventually had to give all the money back to investors, TON carried on as an independent project. And, while the two companies are supposedly separate, they work together on many projects:
Durov’s announcement therefore led to renewed interest in TON, especially with it following an announcement from February, where the company stated it will soon share ad revenue with channel owners, and pay it out exclusively via TON.
Ethereum Network Completes Dencun Upgrade
The Ethereum Network just announced the successful completion of its “Dencun” upgrade, the network’s biggest upgrade since The Merge.
Without getting into the technical jargon, here’s what you need to know:
Consider Dencun as just another step in Ethereum’s big roadmap of becoming more scalable, efficient, and secure.
This most recent upgrade reduces transaction fees on Layer 2s (L2s), such as Arbitrum, Polygon, Base, Optimism, etc.
For users → it will now be cheaper to use Ethereum L2s.
For developers → it makes Ethereum more attractive to build on and will likely boost the development of new apps and chains on the network.
If you’re a simple buy-and-hold investor, there’s nothing you need to worry about on your end. The warm, fuzzy feeling you might have of owning a crypto commodity that is actively improving is justified.
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The Private Crypto Market Looks to be Rebounding
Monad Labs, an Ethereum competitor, is reportedly in talks to raise more than $200 million at a $3 billion valuation.
Why it matters: While the overall crypto market is hitting all time highs, the venture market has yet to rebound.
According to Crunchbase, there have only been 219 crypto fundraises in 2024, compared with 571 in the same period a year ago.
But valuations and capital raised are up: It’s not only Monad Labs raising funds at eye popping valuations. In just the past few weeks we have:
Elixir, a DeFi market-making protocol, announced a $8 million Series B at an $800 million valuation.
Eclipse, a prelaunch SVM rollup, announced a $50 million Series A. While we don’t know the valuation, our guess is… high.
And don’t forget that Eigen Layer just raised $100 million.
Back on the wagon: Paradigm, which is reported to lead Monad’s round, looks to have changed their tune after seemingly pivoting to AI last year.
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Despite Solana’s network downtime/maintenance woes, Solana is significantly faster and cheaper than Ethereum. For context, Solana gas fees currently stand at $0.000522. To make a transaction on Ethereum, on the other hand, it costs $6.58 on average. That’s a big difference… especially for developers crawling themselves out of a bear market with limited capital.
Look, in past crypto bear markets, it was common to see projects capitulate (anyone remember NEO?!) and get lost and forgotten in the black sea of altcoins. Solana doesn’t look to be one of them.
By now, it’s evident that big players and investors alike still see value in the project. In August, for example, Solana integrated with Shopify. And in September, Visa announced that it had chosen Solana to help with its stablecoin ambitions. That’s some big baller stuff for a company with a lot of bad rep.
Since we published that, Solana (SOL) is up about ~175%.
But here's another reason it's still worth watching:
Bloomberg recently reported that Pantera Captial has been raising a $250M fund to purchase locked SOL from the FTX estate. They intend to buy SOL at a significant discount ($59.95).
Given SOL's current trading price, at nearly 2.5x that discounted rate, the deal seems like a no-brainer.
But the move involves a four-year holding commitment, showcasing both the opportunity… and the risk.
The move does signal more than just a financial one; it's a nod of confidence to Solana. Getting a name like Pantera on board, for four years, definitely adds some credibility. SOL prices popped 14% on the day the news hit.
Launched in December 2017, CoinSnacks is home to the longest continuously running crypto newsletter. Each week, we publish our cryptoasset musings to an audience of 35k+ crypto enthusiasts and investors.
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