There is a new coin on the block in the crypto world, and it’s growing fast. Its name is Bamk of Nakamoto Dollar. In this post, I am going to explain what BAMK is and whether it’s a good investment.
What Is $BAMK?
BAMK is a token that you receive as a reward for buying and holding the Nakamoto USD (NUSD) stablecoin.
1 NUSD is equal to 1 US Dollar.
NUSD is the first stablecoin native to the Bitcoin blockchain.
It uses a perpetual swap to stabilize its value, and by doing so, it earns a yield, which it pays out in the form of BAMK tokens.
NUSD is named after Satoshi Nakamoto, the creator of Bitcoin.
Allow me to elaborate on what you need in order to understand BAMK and NUSD.
1. You can now mint tokens on the Bitcoin blockchain
Up until recently, you could not mint tokens on the Bitcoin blockchain.
This was something that you could only do on blockchains with smart contracts such as the Ethereum blockchain, Solana, etc.
However, with the emergence of Bitcoin Ordinals and the BRC-20 standard in 2023, it became possible to issue tokens on top of the Bitcoin blockchains.
You can do this by adding images and other files to Bitcoin transactions.
People started experimenting and minting loads of meme coins, causing a lot of bloat on the Bitcoin blockchain.
Then, in April 2024, a new standard emerged known as Runes.
Runes allow you to mint fungible tokens on the Bitcoin blockchain in a more efficient manner that causes less bloat to the network.
Many people in the Bitcoin community are extremely excited that Bitcoin might develop its own ecosystem of dApps like Ethereum did.
They argue that since the Bitcoin network is the most decentralized and secure platform, it makes sense for all DeFi activity to move to Bitcoin.
2. A new type of stablecoin
What Is a Stablecoin?
Stablecoins peg their value to that of a fiat currency, most commonly the US dollar.
1. Dollar backed stablecoins
The largest stablecoins are USDT and USDC.
Both of these are backed by US dollars, i.e., you give them a dollar, and they give you a stablecoin.
These protocols are extremely profitable because they take your dollar and invest it in 3-month treasury bills, which pay 5%. They keep the 5% for themselves.
The Tether USDT team is less than 100 people and yet they generated $4.5Bn in revenue for the first quarter of 2024.
New emerging stablecoins are competing against these giants by offering to share part of the gains with the holders of the stablecoin.
2. Collateralized stablecoins
The second type of stablecoin is a collateral-backed stablecoin.
The largest of these is Maker’s DAI token, where 1 DAI is equal to one US dollar.
To mint DAI, you need to put up another digital currency as collateral. For example, you might put up $100 worth of ETH to borrow $50 worth of DAI.
If the value of ETH drops, you may need to top up, or else the protocol liquidates your collateral.
What’s important here is that 1 DAI will always equal one dollar, because the market knows that each DAI is overcollateralized.
3. Algorithmic stablecoins
A third type of stablecoin is an algorithmic stablecoin.
The most famous example is that of Terra Luna, where TerraUSD was backed by LUNA.
If the value of TerraUSD dropped below a dollar, they would just mint more LUNA to prop up the stablecoin.
In hindsight, the problem was that LUNA didn’t have much other use, and when people stopped believing it was valuable, the whole equation broke down.
4. Synthetic stablecoins
But there is a new stablecoin concept that has emerged called a synthetic stablecoin.
This is a method first proposed by Arthur Hayes, the former CEO of BitMEX and a prominent figure within the cryptocurrency industry.
To understand how it works, we need to understand a technique that large hedge funds use to invest in digital assets.
Say I buy Bitcoin today at a spot price of $66,067.
I am long the spot price because I expect its price to increase. However, this is not guaranteed to happen.
Bitcoin is volatile and the price could just as easily drop.
In order to hedge my risk, I am going to try and lock in some profit so that no matter what happens to the price, I make a return.
How a delta neutral stablecoin works
The product I am going to use is a futures contract.
Futures trading requires the buyer to purchase or the seller to sell the underlying asset at the set price, whatever the market price, at the expiration date.
At the time of writing, the futures contract for two months from here is $67,050. If I sell this contract it means that the buyer of the contract will need to buy Bitcoin from me at $67,050.
Because I don’t own the contract, I need to borrow money to open my short position. I may also need to borrow money to buy the Bitcoin in the first place.
So today, my cost is $66,067 + fees to set up my position. In two months, I will have made $67,050-$66,067-fees=$983-fees.
The price of Bitcoin may be 50,000, or it may be 100,000.
I don’t care.
What I have managed to do is make $983-fees.
With Bitcoin, historically, the futures price has exceeded the spot price about 75% of the time.
What this means is you could collect money from people and invest it in such a strategy.
In return, you issue them a token whose value you peg to the dollar, and you share any returns from the strategy with them.
In fact, instead of futures, this strategy uses Perps. Perps are like futures contracts, except they don’t have an expiration date.
Ethena: The First Synthetic Dollar
The most popular synthetic dollar is Ethena’s USDe.
At the time of writing, if you convert your dollars into USDe, you have an annual yield of 17% just by holding the stablecoin.
The yield is generated by holding a delta-neutral position in trading and staking yield on ETH.
What Is NUSD?
The NUSD token launched on the Bitcoin Blockchain and uses USDe as collateral.
In the future, the team behind NUSD plans to implement its own delta-neutral strategy.
However, in order to bootstrap the project, they decided to back each NUSD with 1 USDe.
What Is BAMK?
When you hold Ethena’s USDe, you get rewarded in more of the stablecoin.
In a similar manner holding NUSD also earns rewards except you earn them in the form of BAMK.
At the moment, BAMK is just a meme token with a fixed supply of $21 billion.
However, in the future, the team behind the project hopes to turn it into a governance token and possibly a utility token that does stuff.
There is a lot of speculation about what BAMK may end up doing, as this platform was only launched in May of this year.
Is BAMK a Good Investment?
NUSD is the first stablecoin that is native to the Bitcoin blockchain. There have been other attempts at a Bitcoin stablecoin; however, these live on sidechains and not on the actual Bitcoin blockchain.
In order to decide if BAMK is a good investment, I look at four dimensions
- Team: 66%
- Product: 95%
- Tokenomics: 60%
- Momentum: 70%
Team
1. Are the founders legit with related experience? ✔️
The core team behind BAMK consists of 5 people.
The only person who is doxxed is Jack Liu, who has worked at OKX for eight years.
Prior to that, he served as Managing director for Circle, the company behind the USDC stablecoin.
Jack is a good public speaker and appears frequently on podcasts and Twitter spaces. He says he is the only person on the team who speaks English, and that the rest of the team will reveal themselves in the coming months.
2. Have they built Web 3 projects before? ✔️
Not, but they have worked for USDC and OKX.
3. Did they do an exit?
N/A
4. Can you find legit profiles on LinkedIn? ❌
Only Jack Liu.
5. Did they raise funds? ❌
No 100% bootstrapped project.
6. How long have they been around? ❌
Since May 2024.
7. Public appearances through Interviews/podcasts ✔️
Yes, you can easily find interviews and podcasts with Jack Liu.
Overall Team Score: 66%
Product
1. Is it easy to understand what they do? ✔️
You have to be familiar with crypto, but their documentation is one of the easiest to understand.
2. What is it?
A meme token is used to reward holders of the NUSD stablecoin.
3. Is there a demand for their product? ✔️
Yes, a stablecoin is required for DeFi to blossom on the Bitcoin blockchain. NUSD could be it.
4. Is there a use case? ✔️
Yes, you need a stablecoin if you are going to have a DeFi ecosystem on Bitcoin.
5. How big is the market? ✔️
DAI on Ethereum has $5Bn market capitalization, and USDC, which is the stablecoin of choice in DeFi, is $32Bn. NUSD is $4Mn, and BAMK is $7mn, with an FDV of $ 113 million.
6. Is it being used? ✔️
Yes, $4Mn is locked in NUSD. Partnerships with OKX, Magic Eden, UniSat, DotSwap, Liquidium, and Fluid Tokens.
8. Has the product launched? ✔️
Yes, you can buy NUSD from MagicEden and DotSwap.
9. Does it have a strategic moat? ❌
Not really, but it’s the first stablecoin to launch natively on Bitcoin.
10. Is it focused? ✔️
Yes, it’s not trying to throw AI, NFTs, or a metaverse into the mix. They are pretty focused on this one thing.
11. Is the website easy to understand for non-crypto visitors? ✔️
No but the main audience is Degens right now.
12. Do they have a proof of concept? ✔️
Yes, it’s live.
13. Is the UX good? ✔️
Yeah ok.
14. Is it already being done?
Some stablecoins on Bitcoin sidechains but not on the main blockchain.
15. At what stage is the product?
Live
16. How does it create value?
Native stablecoin for Bitcoin blockchain applications.
17. How does the project generate revenue?
NUSD generates revenue through a neutral delta hedging position. To launch, they just invest user funds in USDe. In the future, they will build their own trading strategy.
The team presumably gets BAMK token allocation.
Overall product score: 95%
Tokenomics
1. Why is the coin valuable? ✔️
There will be demand for a native stablecoin to Bitcoin as its own DeFi ecosystem evolves.
2. Did they do a pre-mine?
Yes, 6.25% is distributed for free to firstcomers, and 6.25% is reserved for rewards. The remainder is with the team.
3. Is supply fixed or inflationary?
BAMK supply is fixed at $21Bn
4. Was it a fair launch?
They distributed 6.25% for free.
5. Circulating/total supply ❌
12.5%. At the time of writing, the founders of the BAMK distributed 6.25% of BAMK for free to firstcomers. They are now using another 6.25% to distribute as rewards in return for holding NUSD.
6. Token release schedule ❌
No defined.
7. Are there incentives to reduce or lock supply? ✔️
Yes, BAMK only vests ten months after holding NUSD. At the time of this research, the APY is 200%.
8. How many tokens ✔️
NUSD and BAMK. No confusion here.
9. How much upside is left: market cap vs industry size ✔️
$112Mn vs Billions for BAML. $4mn vs. billions for NUSD.
10. Is it listed on major exchanges?
No, only OKX. Otherwise, you can use MagicEden or DotSwap if you have a cryptocurrency wallet. You will need to convert fiat money to Bitcoin first.
Overall tokenomics score: 70%
Momentum
1. Is it trending on social media? ✔️
Not massively yet. Momentum is building as they publicize the project through podcasts, etc. Wallet addresses are growing fast.
2. Is the market cap low compared to similar projects? ✔️
Yes
3. What is the crypto market like? ✔️
In the middle of a bull run.
4. What is the sentiment for the sector this crypto focuses on ✔️
It’s not RWA, gaming, AI, or DePIN. However, Runes are somewhat sexy these days.
5. Are they marketing heavily?
No.
Overall momentum score: 60%
Overall verdict:
Overall, BAMK and NUSD are the type of coins that could see massive growth in market cap. Whether this will happen within this bull run or the next remains to be seen. The demand for a native stablecoin on Bitcoin will be extremely high if Bitcoin develops its own ecosystem of DeFi apps.
This is a highly asymmetric bet. It could easily go to zero, but if it works, the payoff could be very high. Challenges ahead also include finding a derivatives exchange to structure their trades.