Messari Daily Brief Jan. 20, 2021 - Dotcom Seller's Market

You either sell to an exchange, or you live long enough to tokenized.

With limited exceptions, that will be the liquidity playbook most crypto companies follow this cycle as liquid token treasuries appreciate and crypto infrastructure companies realize their ability to spend liquid post-IPO stock for juicy acquisition targets. Coinbase’s acquisition of Bison Trails yesterday marks the 10th nine-figure M&A exit within crypto, each of which has involved an exchange (sellers: Bison Trails, Earn, Tagomi, CryptoFacilities, Blockfolio, CoinMarketCap, Poloniex twice, Bitstamp, Korbit).

At nosebleed valuations in a bull market, even “expensive" acquisitions can prove accretive for infrastructure companies.

How much traffic will CMC and Blockfolio ultimately redirect to Binance and FTX, respectively? How much will Coinbase’s enterprise brokerage, custody, and staking services get bolstered by acquisitions of Tagomi and Bison Trails? When will the Poloniex hot potato change ownership again this cycle? How easy is it for corp dev teams to talk themselves into deals that strengthen their moats amidst the froth?

My sense is that the 10 mega-deals we’ve seen so far have proven lucrative for both parties (with the exception of Polo). But the next ten might not prove so smart in hindsight. We’re in the first inning of what I believe will be a multi-year seller’s market. And that will lead to acquisitions that look less like YouTube and more like AOL.

Froth? We’ve not seen anything like that yet on the M&A front. What comes next could rival the Dotcom bubble.

Headlines that matter:

• INTEL: Origin compensation plan; ETH, SOL, FIL, ATOM software releases; update on XRP delistings
• PRO: The Community Economy and Crypto in Asia
• Coinbase buys Bison Trails for ~$100M (The Block, Analysis)
• Brave offers native IPFS integration (CoinDesk)
• Curve fork Saddle raises $4mm for stablecoin AMM (CoinDesk)
• OG Crypto Custodian Xapo gets banking license in Gibraltar (Decrypt)
• No pardons for Ulbricht, Snowden, Assange, one for Ripple (CoinDesk)
• Human Protocol helps humans work for machines (Decrypt)
• Soulja Boy crashes crypto market overnight (Decrypt)
• Daily Shade: “scary to some today but necessary tomorrow.” (Brian Brooks)