MarsBase OTC RECAP Q1 2024

The first quarter of 2024 has come to a close, prompting us to reflect on our accomplishments. Today, however, let’s shift our perspective and delve into the over-the-counter (OTC) market, where the real magic happens behind the scenes.

The OTC market

The cryptocurrency over-the-counter market represents a vital facet of the digital asset world, providing a platform for private transactions between parties, bypassing traditional exchange mechanisms. This market has garnered significant interest due to its ability to discreetly handle large transactions, minimizing market impact and offering more favorable prices for major deals. In recent years, the OTC market has undergone transformation, evolving from a somewhat opaque and unregulated sphere into a more transparent and regulated market. This evolution is largely driven by the growing interest of institutional investors in cryptocurrencies, necessitating a system that aligns with regulatory requirements and investor interests.

Historically, the OTC market operated in a “gray area”, with transactions often conducted using forward contracts that did not fully comply with regulatory standards. However, as the market has matured, there has been a significant shift towards adopting more legally compliant methods of token transfer, with increased focus on Simple Agreement for Future Tokens (SAFT) and Simple Agreement for Future Equity (SAFE).

SAFT agreements are utilized in the cryptocurrency space to allow investors to purchase tokens before their issuance. This commitment ensures that tokens will be distributed to investors in the future when the project launches and tokens become publicly available. This scheme is attractive as it provides a structured and legally acceptable means of fundraising, guaranteeing investors a clear path to obtaining tokens in accordance with regulatory requirements.

Originally developed for startups as a way to secure funding without an immediate company valuation, SAFE agreements have been adapted for the cryptocurrency market. Essentially, SAFE acts as a legally binding promise, allowing an investor to acquire a certain number of tokens at an agreed price at some point in the future. SAFE typically does not impose equity or debt obligations on the startup, making it an appealing tool for providing quick and straightforward financial support to early-stage companies.

Furthermore, the OTC market has expanded its focus to include the tokenization of illiquid assets, opening up new investment opportunities. Tokenization enables the liquidity of equity by transforming shareholder capital into tokens that can be transferred and traded. Tokenized SPVs offer the opportunity to invest in top-tier companies with smaller checks, leading to success stories of how this works.

As an example, we can highlight the positive experience of MarsBase, which tokenized the first Layer Zero secondary deal, attracting over $300,000 in trading volume on the first day alone.

Essentially, the modern OTC cryptocurrency market offers a transparent, secure and flexible environment for conducting large transactions, investing in emerging technologies, and accessing new forms of asset ownership. But let’s evaluate the market’s performance using publicly available data on volumes and trading outcomes provided by MarsBase, Secondlane and other market participants.

The state of the secondary market

Over-the-counter (OTC) players universally claim an upturn in the market, driven by both the rise in Bitcoin’s value and the recovery of the entire cryptocurrency market capitalization.

The number of monthly transactions has increased more than 5 times compared to the same period last year. The highest market activity was in February of this year (over 100 transactions). Along with this, monthly volumes have increased, peaking at over $1 billion.

Meanwhile, the average offered amount is $5 million.

In the first quarter alone, over 300 transactions were completed, with 30% for asset purchases and 70% for sale.

The total transaction volume for asset purchases in the first quarter exceeded $1 billion, and for sales, it was $3.3 billion.

It may seem like a small level compared to the cryptocurrency or stock market. However, it is worth noting that these are only publicly available data, which significantly exceed the indicators of previous years.

The most in-demand transaction forms remain SAFT and SAFE. It is worth noting that there is a high demand for tokenized assets, prompting OTC market participants to work promptly on creating a corresponding interface.

Among OTC market clients, venture funds account for a significant portion (40%), while in the current quarter, the number of DAOs and syndicates ready to invest in the OTC market has increased significantly (20%). The remaining clients are almost evenly divided among Web3 family offices (15%), corporate VCs (15%) and Angels (10%).

Analysis of transactions conducted in 2024 showed that the most sought-after sectors are:

  • zkRollup
  • Layer 1 and Layer 2 Blockchain Service
  • Infrastructure
  • Bridge
  • DeFI
  • GameFi
  • NFT
  • Social

Despite the obvious hype around artificial intelligence, this investment sphere is not highly demanded on the over-the-counter market. Investors prefer more fundamental projects, which resonates with the behavior of traders in the traditional market, where purchases in the AI, SocialFi, GameFi and of course, MEME sectors currently dominate.

A detailed analysis for the first quarter of the reporting period demonstrates the following area of buyer interest:

  • Scroll
  • Fuel
  • Berachain
  • Layer Zero
  • Manta

At the same time, sellers were more interested in the following projects:

  • Solana
  • Fuel
  • Scroll
  • Wemix
  • FTX

Nearly half of the transactions in the OTC market occur at a discount, further fueling investor interest in such a market.

Moreover, based on the data provided by companies, approximately a quarter of transactions occur without public disclosure, with a lower valuation.

Conclusion

The market has revived, but it is not yet in a normal bullish cycle. Investors’ desire to enter projects at an early stage and maximize profits upon project listing is growing, but there is still some caution due to the sudden and unexpected growth of the cryptocurrency market.

Investors are focused on more predictable returns, hence they choose fundamental projects and less frequently high-risk assets.

Additionally, there is an increase in the number of lots in the OTC market, as well as an increase in the number of partners and clients, which once again confirms the interest of professional market participants in the over-the-counter market and non-public trading.

Platform launch and key updates

This year, we’ve focused on enhancing your experience with the OTC market through our platform — https://otcmarsbase.io.

With over 150 lots available for buying and selling top assets like Fuel, Ledger, zkSync, LayerZero, OpenAi, and more, interacting between buyers and sellers has never been easier. Our team is here to assist with document preparation and offer advice on any queries.

We recently rolled out Marsbase v1.2, a significant update that greatly improves user experience.

What’s New?

🟢Faster Lot Creation: Lot creation is now twice as fast thanks to new functionality and an intuitive interface.

🟢Instant Asset Analysis: Updated lot cards provide crucial information for quick analysis.

🟢Convenient Dashboard: Get aggregated information on a convenient dashboard for efficient decision-making.

🟢Personalized Account: Flexible settings to manage your account.

🟢Notification System: Don’t miss any important events with our customizable notification system.

🟢User-Friendly UX: Our platform has become even more user-friendly for all users.

🟢Stable Performance: Marsbase operates like clockwork, ensuring continuous business operations.

🟢Quick Transactions: Accelerated moderation and transaction processing for faster and more efficient work.

We’re not stopping here. We’ll continue to improve our product, making the OTC market accessible to everyone, aiming for a blend of clarity, user-friendliness to enhance visibility and user engagement.

Tokenisation — trend of the decade

Tokenization of Real World Assets (RWA) is the new trend reshaping the investment landscape.

Real World Assets entail transforming tangible and intangible assets into digital formats through blockchain technology, a process termed tokenization.

By 2030, the tokenized assets market is expected to reach $3.5 trillion to $10 trillion (reports by CoinMarketCap, 21.co, CoinDesk, etc.). This market offers consistent, dependable returns supported by conventional asset classes.

Advantages of RWA:
🟢Liquidity
🟢Expanded opportunities for owners to attract capital
🟢Fundamental assets, tokenized shares, debts, tangible assets, and real estate
🟢Broad lending and borrowing possibilities
🟢Yield ranges from 5% to 120% annually
🟢Cross-border investment
🟢Automation of legal processes

We will focus on tokenized secondary, SPAC, MA, debts. Work has already started in this direction and we will be sharing our findings shortly

Conclusion

The market has revived, but it is not yet in a normal bullish cycle. Investors’ desire to enter projects at an early stage and maximize profits upon project listing is growing, but there is still some caution due to the sudden and unexpected growth of the cryptocurrency market.

Investors are focused on more predictable returns, hence they choose fundamental projects and less frequently high-risk assets.

Additionally, there is an increase in the number of lots in the OTC market, as well as an increase in the number of partners and clients, which once again confirms the interest of professional market participants in the over-the-counter market and non-public trading.

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MARSBASE | SAFT / SAFE Marketplace

#Web3 #OTC aggregator for SAFT, SAFE, token warrants, common shares, team options and illiquid tokens