The crypto market may be down, but Liquid Meta Capital Holdings Ltd. (NEO:LIQD) liquidity mining operations keeps running strong. With a business model that generates excess fees in periods of heightened volatility—yet hedges itself accordingly the drawdown—the company hasn’t skipped a beat This skill of capturing yield while protecting capital is an art Liquid Meta appears to be perfecting.
As a reminder, Liquid Meta generates the majority of its revenue through hedged liquidity mining operations. The core objective is to scale its operations through consistent fee generation, as opposed to exposure to the volatility of digital asset prices. This is achieved through a process in which crypto holders lend assets to a decentralized exchange in return for rewards. These rewards commonly stem from trading fees that are accrued from traders swapping tokens. This strategy is combined with methods in which the underlying crypto can be hedged, thereby reaping the rewards without impairment in the assets.
Investors caught a glimpse of the immense earning potential of Liquid Meta’s model earlier this month, when the company released highlights of their first financial report as a reporting issuer. The company reported Q2 2022 quarterly revenue of US$188,229 on a gross profit margin of 96%—a number that indicates just how much operating leverage the model has. Even including the loss on digital currency inventory and digital assets sold short, Liquid earned a 76% gross profit margin.
And despite the recent nosedive in crypto prices, the model keeps on performing. Liquid Meta CEO Jonathan Wiesblatt tells Shadd Dales that revenue generation has remained robust:
So we put out some news a couple of weeks ago. And, over a 24 hour period—when the price of BTC and ETH—declined by 10 and 12% respectively, we had a record revenue period of that 24 hours… Revenues have been incredibly strong in the month of January, just given the volatility that we’re experiencing. So, like I said, it’s an all-weather balance sheet, it’s an all-weather business model. We want investors to be able to see protection of capital in periods of deceleration when assets are declining.
Now that Liquid Meta has deployed an additional $20 million of capital—as opposed to the roughly $2 million deployed in the previous reporting quarter—the model’s ability to generate revenue has risen substantially. The model’s ability to generate yield should not be materially impacted with the rise in capital deployed.
To view our inaugural interview with Liquid Meta Holdings CEO Jonathan Wiesblatt, click here.