Are you $IN it?
An overview of Solana’s Invictus Dao.
There are now 50 Ohm forks live in the market and counting. What sets an Ohm fork apart. Here is my take on Solana’s first ohm fork — Invictus Dao,
There are a few key factors when I go about investing into a project:
- Differentiation — Invictus’s dynamic rebasing vs. 8-hour rebasing.
- Tokenomics and mode of launch — Fair launch vs. domination by early whitelisters
- Team & Execution — Ability to integrate with new protocols
- Roadmap — What are the plans to increase the value of assets and treasury (thats what backing it)
Net: Ultimately, if the protocol is able to execute well (team), grow its treasury value consistently, the protocol’s underlying value will grow and so will the people who staked in it. Olympus was able to grow significantly by innovating with Olympus Pro (Bonds as a Service, BaaS), V2, and Proteus. Invictus just got started in Solana’s vast ecosystem and accounts for just 0.3% of Solana’s market cap. There should be a long runway for $IN stakers to benefit as $IN’s team executes on integration.
Brief intro on Sol Invictus
Sol Invictus is the decentralized reserve currency built on Solana. Each IN token is backed by a basket of assets currently being USDC, USDT, mSOL & USDC LP. Backed is not the same as pegged, so the value of $IN can be above the value of its backing.
In this case, the market cap is $138mn vs. the treasury at $69mn, so its valuation is ~2x of whats backing it.
The growth in treasury value should drive growth in price appreciation and the multiples (Market Cap/Treasury) should reflect what the market assigns to the protocol. The faster the growth, the higher the risk, but if executed well, should drive better protocol growth and enjoy a premium.
What sets Sol’s Invictus apart?
Most treasury backed currencies rebases on an 8-hour period. This creates volatility as it creates downward pressure on the token price in concentrated period after each rebase. Sol’s Dynamic rebasing (aka rebasing every block) helps to smooth this out, so it wouldn’t matter if you entered $IN before/after the rebasing. This makes the protocol more stable and solvent.
Invictus is also coded in RUST (vs. most Ohm fork copycats in Solidity). The developers coded from scratch. This will mean two things
- It is hard for anyone to quickly launch competitive products (BabylonDao comes to mind) since it is difficult to copy/paste
- Rust is more secure and robust
Fair Launch
$IN was launched at a price of $4 with no whitelists or presale. This will mean that there are no whale whitelister holders getting ready to dump on the market when the price rise. This is fairly typical in new launch where whitelisters have a significant advantage
Growth drivers (Value accrual)
Price appreciation of the token should be dependent on the protocol’s ability to drive growth in the treasury value. This depends on
- Ability to partner more protocols
- Type of assets that the treasury holds
As of the time of writing, Invictus Dao has 3 partnerships
Marinade (#2 by TVL locked) and Tulip (#6) should be providing the primary ways for $IN to increase the APY. By using USDC,USDT, and mSol, $IN can deploy them on the protocol and boost APY for $IN stakers.
Type of assets
Invictus stands out with having a high percentage in stablecoins amongst the large cap ohm-forks. Out of the $70mn in treasury value, 37% is in stable coins and 57% in stablecoin-LP. Only 5% is volatile assets (in this case mSol).
I believe this is because the developers have decided to prioritize stability at the initial phases. This is positive as this puts a floor in the treasury value, but the yield accrual from farming stablecoins is less than L1/L2 assets such as Orca or Sol. mSol was only added recently.
As more non-stable coins are added, this adds volatility but also further growth to the treasury value (the backing of the coin). The downside of higher volatility is that in a down market, the value of the treasury tanks hard. I foresee the value of treasury will accelerate growth on increased integration with solana ecosystem.
Eventually, if Invictus does it correctly, stablecoin mix should be a small percentage.
Valuation
$IN grew to significant market cap of $140mm in a short period of launch with a large percentage of their treasury backed by stablecoins. This is impressive as it gives them firepower.
The Solana ecosystem is big enough to sustain a >$1bn valuation ohm fork. Wonderland Time is valued at $3bn vs. Avax’s market cap at $25bn (12%). Olympus is valued at $3.5bn vs. Eth’s $500bn. Invictus is currently only at $140mn vs. Solana’s $70bn. Assuming $IN captures values at 1% of Solana’s market cap, thats a 5x upside from current price.
The other way to look at it is the total value locked in the ecosystem as compared to the treasury value. You can see that TIME took an outsized market share at 7% ($800mn vs. $12.5bn TVL across AVAX ecosystem). For $IN, there is certainly upside for its treasury value to grow to capture yield farming opportunities across Solana’s $11bn TVL. One can argue that a T-backed currency is now an essential part to grow the ecosystem sustainably.
Lastly, when we compare market cap vs. treasury value, $IN looks cheap at only 2x Market cap vs. Treasury backing. Are you $IN it?
Acknowledgements: Thanks to The Giver for the framework which I adapted.
