Preamble on value hunting

Have been thinking about what the Buffet / Li Lu school of value investing look like in crypto: assets w/ enough downside protection, but sufficient upside rerating catalysts for sufficient r/r on your money. 

In the investable universe of crypto volatility, this type of value investing is likely impossible unless you go gem hunting in the <50mm micro caps… but at those levels, management has usually exit scammed and will never take you to valhalla…

While most of the market is mired in mediocrity, there is a small group of coins that has the management capability and mispricing to be worth our time.

$nrn, the forgotten son crowned by Framework and paradigm

In the microcap sea of trash, I came across $nrn, trading at ~4mm mc at time of writing with ~10% circulating… some context: 

• Project started in 2021 by CEO Brandon Da Silva, and COO Wei Xie, who were both at OPTrust, one of Canada’s largest pension funds, running quant strategies building AI Arena, a Super Smash-style game, whereby players train bot versions of themselves (via reinforcement learning) and enter tournaments to win prizes against other players

• This captured the imagination of Paradigm, which led $5mm seed round in 2021 w/ Framework… two years on, Framework doubled down and led the next $6mm round in 2023 — to be crowned by two king makers, the hype was real.

• However, choosing to TGE on June 24th at the midpoint of gaming and AI 2Q24 sell off was a deeply unfortunate decision, but as we all know, in unfortune is where true value may lie.

• Below illustrates $nrn coming to market mid AI x gaming sell off ($nrn in white vs $prime, $karrat)

  

• Just today, $nrn has announced the ARC SDK, productising the proprietary ML underpinning first game, AI Arena, for third party games to implement ML and AI into their games, which has seen the coin pop 20%.

• Clearly the market views $nrn as a utility coin of a niche, dorky game, but the launch of v2 for $nrn to power ARC could see the public rerate this amongst ai gaming and ai infra peers who absolutely dominated in 1Q24.

  

Closing

Micro cap backed by framework / paradigm working on ai and gaming… upside is obvious, but in a market filled with ai projects built by short term extractors, this type of quality is hard to find. As $nrn evolves into an ai infra story, I like this as a venture bet in the public markets.