December 2024, Q4 Quarterly Report

Welcome to the second DAMM Capital quarterly report. Our goal with these reports is to keep our clients and investors informed about the ongoing development of the decentralized finance ecosystem, provide insights into DAMM Capital's performance and future direction, and explain the strategies and decisions driving our progress.

2024 Year in Review

2024 has been an incredible first year for DAMM Capital, marked by significant milestones and accomplishments. We successfully completed the development of our DeFi asset management protocol, The DAMM Protocol, which received a $70,000 grant from the Arbitrum Foundation to fund its upcoming audit. Our assets under management (AUM) reached an impressive $900,000, underscoring the trust our clients place in us.

A key highlight of the year has been our autonomous stablecoin money market strategy, which boasts over 18 months of stable returns across a variety of market conditions. This strategy not only proves our ability to generate and maintain alpha but also shows the power of the robust DeFi data pipelines we have developed and deployed. These pipelines have been instrumental in enabling the seamless operation of the money market, providing the real-time insights and analytics necessary to sustain its consistent performance.

DAMM Capital proudly showcased its work at Aleph, the Crecimiento pop-up city in Buenos Aires, in august where we engaged with high-ranking government officials, and at DevCon in Bangkok, solidifying our position in the global DeFi ecosystem. Achieving financial profitability this year marked a significant milestone for us as a startup, driven by our operational efficiency and disciplined approach. Notably, we maintained an exceptionally low monthly churn of ~$400, reflecting our commitment to cost management and sustainable growth.

We closed out the year by doubling our team size to four, welcoming two talented Argentine quants to propel our strategy development. Additionally, we were accepted into the prestigious Acelera LATAM startup accelerator. Created by Odisea in partnership with leading crypto VCs, Acelera provides invaluable support, mentorship from industry leaders, and resources to promising startups like ours, positioning us to raise our first pre-seed round in the near future.

While we take pride in this past year’s achievements, at DAMM Capital, we always look ahead, never behind, as we focus on the opportunities and challenges that await in 2025 and beyond.

Markets: The run-up to 2025

The crypto market has experienced a significant rise in valuations during the final months of 2024. After enduring 80% drawdowns in many digital assets throughout this bear market, recent market dynamics reflect an ecosystem-wide repricing of assets. This shift was largely triggered by the American election results, which served as a catalyst rather than the sole cause, confirming an underlying trend we had been closely monitoring. While the election event marked the official beginning of the new bull market for many market participants, at DAMM Capital, we had already observed increasing transaction volumes across markets, which had made us medium to long-term bullish months earlier. Although the broader market sentiment now acknowledges the start of a bull market, our proprietary data and metrics had signaled this trend well in advance.

We anticipate 2025 to be a pivotal year for the crypto industry, and particularly for DeFi, as institutional and sovereign players begin to adopt this transformative technology. This “DeFi Renaissance” will likely be accompanied by clearer regulations, significant capital accumulation, and asset repricing, laying the foundation for the remainder of this decade. At DAMM Capital, we are well-positioned to capitalize on this growth. Building during the bear market has prepared us for this moment, and we find ourselves in the right place at the right time. As we look ahead, the execution of our roadmap remains critical to our success.

Roadmap: Q1 of 2025

The year begins with the DAMM Protocol audit on January 27th. This private audit will be conducted by lead security researchers at Sherlock Audits. Following the private audit, we will undergo a second phase—a public contest hosted on the Sherlock platform. These two audits will ensure the DAMM Protocol meets the highest standards of security and reliability before going live. Once the audits are completed, we will begin onboarding external LPs, officially scaling DAMM Capital while remaining committed to the principles of self-custody, transparency, and permissionless systems.

On January 17th, we will also commence our participation in Acelera, the accelerator program organized by Odisea. This 12-week program will provide invaluable access to industry-leading companies and mentors. It will culminate with DAMM Capital’s involvement in the March Crecimiento pop-up city at Aleph in Buenos Aires, Argentina. Q1 promises to be a pivotal quarter, positioning DAMM for increased visibility and growth on the global stage.

To adapt to an ever-changing ecosystem, our Q4 roadmap included several micro-pivots that allowed us to better hone in on market demands.

We believe the market is increasingly seeking:

• High-yield strategies

• Non-USD denominated money market strategies

• Flexible institutional DeFi infrastructure

High-Yield Strategies

Recent market sentiment has amplified demand for high-yield strategies in DeFi. These strategies inherently involve greater risk and complexity, and at DAMM Capital, we have been actively developing solutions to meet these demands.

Over the past few months, we have been working on a hedged ETH/USDC strategy leveraging Uniswap V3 and GMX. Based on our backtests, this strategy has the potential to deliver high double-digit to triple-digit annualized returns. As our first volatile strategy, it marks an important milestone for DAMM Capital, opening the door to similar strategies with other pairs, such as BTC/USDC. The sophistication of this approach has necessitated the expansion of our quant and research team.

We plan to launch this strategy privately using our own capital in the coming weeks. Once its performance is validated, we will open it to client deposits. We anticipate making this strategy publicly available to clients by mid to late Q1.

Non-USD Denominated Money Market Strategies

The renewed optimism in the market has driven a surge in demand for money market strategies denominated in volatile assets. Both institutional and private actors have expressed interest in such instruments, seeking to retain exposure to tokens like ETH and BTC while earning yield on their holdings. This demand aligns with the broader dynamics of a bull market, where participants look to maximize upside potential without sacrificing the opportunity for stable growth.

In response, DAMM Capital is in the final stages of development and beta testing for an ETH-denominated money market fund. This strategy is designed to prioritize stable nominal growth of ETH holdings, offering crypto-native participants a way to earn returns on their ETH. It also caters to actors who measure their performance relative to USD and are seeking to enhance their ETH-based returns.

By addressing the dual objectives of upside preservation and yield generation, this fund exemplifies our commitment to providing innovative solutions for an evolving market. We aim to launch this strategy in the coming quarter, further expanding our suite of offerings to meet the needs of a diversified client base.

DeFi Infrastructure for Institutions

At DAMM Capital, we are committed to working exclusively within DeFi, which inherently demands robust financial infrastructure. Over a year ago, we evaluated many existing solutions but found none that fully met our needs. They were either too rigid, insufficiently decentralized, or lacking essential features. In response, we decided to develop our own on-chain infrastructure, and after a year of work, it is now complete and ready to launch.

Through conversations with other DeFi hedge funds, we identified a common gap in infrastructure tailored to their specific needs. This has created an opportunity for us to let our technology speak for itself. We are currently in advanced negotiations with multiple hedge funds to provide access to our infrastructure in exchange for a share of their revenue and new distribution channels for our yield products.

We expect this to become a valuable business line in 2025, helping us bootstrap growth through strategic partnerships while positioning DAMM Capital as a leader in institutional DeFi solutions.