CGCI-LV Target Markets and Upcoming GTM

[mcgpetch]

The purpose of this post is to quickly share some distribution notes about the Coop’s 2nd product, the CGCI-LV, so that the community can stay informed and can critique and/or help where applicable in preparation for the upcoming launch. This is just a quick summary of some notes we are preparing for the launch of the CGCI-LV and would welcome any feedback!

The CGCI-LV currently has 5 key Target Markets (Sound Money Crypto, Internet Investment Gold, Crypto Portfolio Builders, Crypto Treasury Funds and Private Banks / Asset Managers) which we breakdown below.

1. Sound Money Crypto

• Sound Money Crypto investors are fundamentally self directed investors who have purchased bitcoin, and/or Ether, primarily because of the sound money qualities attributed to it.
• The sound money qualities of hard assets, such as gold, makes CGCI-LV a potentially compelling product for this type of investor.
• There are approximately 63,000 bitcoin investors that are deemed to belong to sound money motivated investors and own wallets in the region of 1-1000btc.
• The target wallet for this market is estimated to be approximately $1.85b.

Value propositions:

• Long term value
• Systemic Hedge
• Strategic allocation (diversification)
• Ability to invest in sound money assets (gold and crypto) in a digital and easily accessible format.

Distribution Venues:

• Brian and Christopher’s are on major crypto exchange venues (e.g., Kraken, Coinbase, Blockchain.com, etc.)
• Brian’s can also be found on DEX’s and major wallets

2. Internet Investment Gold

• Internet Investment Gold refers to gold that is sold via the internet and stored on the investor’s behalf, excluding ETFs.

• The competitive advantages and innovation behind the CGCI-LV make it a potentially compelling product for investors in this market.

• Estimates suggest the total value of gold held on internet gold investment platforms equates to roughly $7.4bn, across 390k decision makers. The target wallet for this market is estimated to be approximately $7.4bn.

  

Value propositions:

• Long term value
• Systemic Hedge
• Strategic allocation (diversification)
• Innovating and interesting
• Ability to Generate Yield on Investment

Distribution Venues:

• Product integration with online gold platforms (e.g., Goldmoney).

• Pushing qualified clients to easy to use crypto platforms, like Coinbase and Blockchain.com, once CGCI-LV is listed.

3. Crypto Portfolio Builders

• Crypto portfolio investors are self-directed investors who have purchased bitcoin and/or Ether as part of a wider portfolio of cryptoassets.
• The similarities between gold and bitcoin make CGCI-LV a potentially compelling product for this type of investor.
• There are approximately 304k crypto investors that are deemed to be portfolio builders and own bitcoin wallets in the region of 0.1-10btc.
• The target wallet for this market is estimated to be approximately $534m.

Value propositions:

• Risk-controlled, long term value
• Strategic allocation (diversification)
• Ability to minimize risk in a crypto portfolio and to build up a structured investment portfolio.

Distribution Venues:

• DEX’s
• On-ramp crypto wallets (e.g. Dharma)
• Estimates below for addressable market at the following exchanges:
  
  

4. Crypto Treasury Funds

• Crypto treasury funds control and manages the Foundation’s assets. For the most part, the Foundation’s investment thesis is to preserve wealth via risk-controlled investment vehicles. Offering a product that is crypto native in the form of an ERC-20 token makes things easier for a Foundation to consider.
• Given the robust structure of the CGCI-LV and being aligned with wealth preservation using cryptoassets, treasury funds is a natural fit. Also, the index has sophisticated research backing the product which is standard for any investment committee.
• E.g., Dash Investment Foundation allocated a portion of their funds in a similar strategy to the CGCI-LV. This proves fit for the product in other treasury funds. See here: https://cointelegraph.com/news/dash-investment-foundation-buying-gold-as-part-of-rebalancing-strategy

5. Private Banks / Asset Managers

• Private banks and asset managers are looking for alternative investment products to offer to their clients, primarily digital assets. A product that blends gold with crypto, in a risk-controlled manner, is very compelling and would be well-received.
• Discussions have already began with this target market and there is interest for the product.

Next Steps:

• The CGCI-LV will execute upon each target market in coordinated steps. Initially starting with Crypto Portfolio Builders and Sound Money Crypto, followed by Crypto Treasury Funds, PB’s/AB’s and finally, IIG.
• There are still a few necessary steps to complete before launch, such as preparing liquidity, finalizing product content, website material, and marketing material.
• Following launch, the CGCI-LV will begin integration discussions with notable partners that are associated with each target market to help access the clients and further our distribution capabilities. This includes exchanges, wallets, lending platforms, and more.

[Uncle]

I can submit a collateral application on Maker when we’re good to go!

[mcgpetch]

Awesome, would appreciate that @Uncle! I would say once we have some traction and credible TLV we should submit the proposal followed by a presentation/deck prepared by CoinShares --I reckon that would carry some weight.

[overanalyser]

Nice work. It’s good to see different potential ideal customers and how they differ.

It’s going to be a very interesting fund launch.

[verto0912]

thanks @mcgpetch!

a bit of an anecdote, I have a friend who has some financial experience and is a corporate layer now. he’s been following crypto at the surface level for perhaps 2-3 years now. because he doesn’t go in-depth, he thinks that BTC and ETH are the only cryptos that will succeed. i spoke with him maybe a week ago and he said that he’d be interested in putting some money in CGCI-LV.

he’s a bit of a different target audience than what you described. not libertarian, small BTC holding, not on DEXs or major wallets, limited engagement or involvement in crypto. he likes the sound money concept, but doesn’t think too much about it. so he’s kind of a less committed to crypto version of Brian. CGCI-LV could be the only crypto product he’ll own.

hopefully, this helps in some way. also, let me know if there’s anything the Investment Committee can help with re content!

[DarkForestCapital]

Thanks for sharing Michael, really interesting to see this level of detail and it’s a great reflection on the quality of output from a team like Coinshares. I shared the post with a couple of ‘Crypto Portfolio Builders’ and both cannot wait to have this type of product rebalancing for them in their wallet.

Looking forward to picking up some CGCI-LV when it launches!

[Lavi]

Great post @mcgpetch, very interesting to see the target audience and the expected market size.
If I may ask, how did you determine the addressable market? For instance 304k portfolio builders. I guess it was either a top-down market sizing estimation or a bottom-up approach using blockchain data?

[mcgpetch]

Thanks for sharing @verto0912! Definitely useful feedback to have on real potential clients. The user profiles do generalize a bit so of course some people will deviate a bit from the profile but I think you raise a good point that there’s another target market to consider; ‘New Crypto Investor’. Somebody that is familiar with the principles of crypto and is interested but just doesn’t know where to start, and/or what to buy. Similar to $BED, I think this is also an appropriate first product for them to buy but would need to get in front of them via their first on-ramp platform into crypto --e.g., Coinbase, Blockchain.com, Robinhood(?), etc.
Added to our research and we will certainly build out on this. Thanks!

[mcgpetch]

Thanks DFC. It would be interesting to interview some Crypto Portfolio Builders post-launch to see what else they would want to see before buying the product (i.e., more research about it, better distribution access, more traction, etc.). Could be a really valuable exercise to get in the minds of our clients and see how to push the needle.

[verto0912]

Hey, @mcgpetch, it’s definitely the “New Crypto Investor” demographic but I see it as a bit different from the $BED crowd. At their level of understanding, investors like my friend would never buy DeFi. They have close to 0 idea what DeFi is. They literally just know Bitcoin and Ethereum (and some 2017 stuff, like XRP, Litecoin, etc)

This group is also quite conservative politically, not libertarian. They are probably more aligned with small government & free market ideology. They don’t like that governments are printing all this money. They like gold, heard of Bitcoin as “digital gold” and are willing to take a punt on Ethereum as part of this. And yes, Coinbase, Kraken, Binance, ideally also PayPal/Robinhood are the right distribution channels.

[Uncle]

Sorry if this was posted, but I couldn’t find this, what oracles will be used for the off-chain assets?

[overanalyser]

Thats a good question I don’t know.

Why do you ask?

If your thinking about oracle attacks - I don’t see how it is possible as the set protocol contracts don’t allow trading with the pool. They always maintain the [number of tokens] ratio based on the values provided by the methodologist.

If your thinking about moving off the NAV peg - I’m not sure.

[Uncle]

I was thinking ahead to Maker collateral they would probably want to vet the system, and they would need price feeds. So still early