FMA Magazine 2021 - 2023

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ALUMNI RECOGNIZED RESEARCH ALUMNI RECOGNIZED RESEARCH DAVID ALDERMAN A New Metric to Evaluate Crypto Ecosystem Fundamentals: The yearsto-profitability ratio is a good way to evaluate a level-1 blockchain. BY DAVID ALDERMAN, CHRISTOPHER JENSEN When evaluating layer-1 (L1) blockchains, many fundamental investors focus on metrics such as price-to-earnings or price-tosales ratios. While these metrics are important, they ignore the programmable aspect of a blockchain’s token supply. Because a blockchain’s emissions schedule (i.e., when new tokens will enter circulation due to staking rewards and token unlocks) is known, its cost structure into the future is essentially known as well. The years-to-profitability (YTP) ratio is a useful new metric for analyzing an L1’s profitability as it incorporates the blockchain’s forward supply curve. It applies the traditional finance (TradFi) concepts of breakeven analysis and payback periods to crypto. The analysis views an L1 blockchain through the lens of a business that sells secured blockspace. Revenues are the fees that users pay to record transactions on the chain, and expenses are the costs needed to secure the network. YTP calculates a blockchain’s profitability timeline by factoring in the protocol’s current revenue and cost structure, a projected growth rate (CAGR) and future supply dynamics. We find YTP compelling because it provides a comprehensive framework for evaluating an individual blockchain or comparing multiple blockchains. We start our calculation with Token Terminal’s definition of L1 profitability: Transaction Fees (-) Supply Side Fees Revenue (Burned Fees) (-) Token Incentives (Unlocks, Staking Rewards, etc.) Net Profit It is important to note that all revenues and costs are denominated in the L1’s native token. And, while unlocks and staking rewards both increase the number of tokens in circulation, the difference between transaction fees and the portion of those fees paid to proof-of-stake validators is what is used to burn or reduce the number of tokens in circulation. In this sense, YTP measures the point at which an L1’s circulating supply stabilizes at 0% inflation. Some broad assumptions we make are: • The percentage of the transaction fee burned remains constant. • The foundation takes 10 years to sell all its tokens. • For revenues, we use the L1’s revenue for the last quarter annualized. In comparing YTP across blockchains, it’s helpful to group the L1s by whether they have an inflationary tokenomic model or a max supply model, because with the latter, an L1 might “break even” simply because the chain’s fixed supply was reached (as modeled for SUI or ADA). Here’s an analysis for multiple blockchains, with Ethereum and Binance Smart Chain excluded because they are already profitable: Years 80 70 60 50 40 30 20 10 -- 13 10 8 25 19 15 31 23 19 Years to Profitability (Assuming Various Revenue Growth CAGRs) 40 29 23 30% 40% 50% ∞ 8 8 7 5 8 9 7 7 6 SOL NEAR ICP APT XTZ FIL AVAX FTM SUI ADA Sources: The Tie, Token Terminal, Artemis, Franklin Templeton Estimates Then, by using the same set of growth rate assumptions for each chain (we calculated future CAGRs of 30%, 40% and 50%), we can make comparisons across chains and explore more deeply what drives YTP. For example, while APT has a high YTP, this is partially because the chain is relatively new and therefore its revenues are smaller than those of other more established chains. SOL has modest inflationary schedules compared to blockchains like NEAR or ICP. In all examples, a blockchain’s ability to burn tokens (and provide some kind of offset to new emissions) is helpful for managing YTP. 40 40 40 58 58 58 This article was co-written by FMA alumnus David Alderman, who is currently working as a research analyst for Franklin Templeton Digital Assets and appeared on the website Coin Desk on 7/5/2023. 54 FMA 2021-2023 MAGAZINE
ALUMNI RECOGNITION This year Yellow Card co-founders Chris Maurice and Justin Poiroux were recognized in the “Big Money Startups” category of the Forbes 30 under 30 for their work and contribution to the African crypto industry. BY RUTENDO NYAMUDA The Forbes 30 Under 30 List is no doubt one of the most internationally recognized lists across the world. This year Yellow Card Financial co-founders Chris Maurice, CEO, and Justin Poiroux, CTO, were recognized in the “Big Money Startups” category for their work and contribution to the African crypto industry. Both entrepreneurs are Auburn grads – Chris is also an FMA alumnus. The 2022 renowned North America list acknowledged 600 business and industry figures, with 30 people selected in each category. Both Chris (26) and Justin (25) were ecstatic about the honor. Chris, who was also profiled in the latest December/January issue of Forbes Africa Magazine, says that after a very busy, intense, and successful year, this accolade is incredibly significant. “For any entrepreneur in pursuit of a dream, being acknowledged on this level, among other pioneers, is a dream come true. This gives me greater inspiration and motivation to continue to work at the highest possible level,” he said. Since its launch in Nigeria in 2019, Yellow Card has grown and developed into one of the most prominent cryptocurrency companies in Africa. And this year certainly proved to be one of the company’s most successful years yet. This year the crypto leader surpassed 1 million customers and went through a transformative corporate rebrand. The company also added a new product called Yellow Pay which is a crypto-powered way to send value across borders. Yellow Card also made headlines with their $40 million Series B fundraise, bringing the total raised by the company to $57 million. This is the largest fundraising ever by a crypto company on the African continent. They enlarged their geographical footprint from 12 to 16 countries, launching in Gabon, Senegal, Rwanda, and the Democratic Republic of the Congo. By far, one of the biggest accomplishments of the company this year was becoming the first cryptocurrency company on the continent to be granted a Virtual Asset Service Provider license to operate in Botswana. Internally they almost doubled their staff - Yellow Card now has 217 employees who work from 24 different countries. More than 95% of the staff is based in Africa with 39% being female. This year the company also officially granted stock options to every full-time employee. In the coming years, Yellow Card will continue to pursue their mission to make it easy and affordable for anyone, anywhere in Africa to interact with the digital currency ecosystem, send and ALUMNI RECOGNITION CHRIS MAURICE receive money, and control their own finances. Making basic financial services accessible to 1.2 billion people via crypto is not just a pipe dream - but something they are actively pursuing every day. FMA is proud to announce that Chris will participate in the 2023 Financial Leadership Summit – our first FMA alumnus to be featured as an esteemed executive panelist. FMA 2021-2023 MAGAZINE 55
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Page 15 and 16: FMA RESOURCES OVERVIEW Since its in
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Page 21 and 22: A LOOK AT OUR STUDENTS Rachel Turle
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Page 25 and 26: A LOOK AT OUR STUDENTS A Birmingham
Page 27 and 28: A LOOK AT OUR STUDENTS FMA SAYS “
Page 29 and 30: FINANCIAL LAB After years of planni
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Page 47 and 48: INTEGRATED EARNINGS For the sixth y
Page 49 and 50: HARBERT’S SPRING GRADUATION MARSH
Page 51 and 52: AWARDS & SCHOLARSHIPS WESLEY LOWMAN
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Page 57 and 58: Through collaboration, support, and
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Page 61 and 62: 2022 FULL TIME PLACEMENTS AYCO - At
Page 63 and 64: MASTERS OF THE FUTURE JOHN TAPP COL
Page 65 and 66: Our Investment Team Meet the dedica
Page 67 and 68: Letter from the 2023-2024 CIO, Wesl
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Page 81 and 82: ALUMNI UPDATES Abigail Coleman ’2
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Page 87 and 88: FROM CONCEPT TO CREATION We want to
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FMA Magazine 2021 - 2023

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