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Financial Update for January 2023
Every month the Lisk Foundation provides a financial report in which monthly expenditures are transparently broken down.
Total Assets Held
An overview of all fiat currencies, stablecoins, cryptocurrencies, and managed assets currently in possession of the Lisk Foundation is illustrated below.
The current plan is to use our fiat and stablecoins throughout 2023. With new cryptocurrency liquidations into fiat or stablecoins only to be executed towards the end of 2023. Compared to December 2022, we have liquidated and converted our USDC position to fiat and have sold our GBYTE position for USDC.
In January 2023 we reported about a write-off of 6,500,000 USDC that were lent to BlockFi. 2,025,000 USDC were and are still remaining on the books. If you haven’t read the December 2022 update, here is the explanation of the write-off:
In 2022 the Lisk Foundation didn’t have any revenue streams established which is one of our main goals for 2023 and beyond. In order to satisfy an often requested LSK token buy back, the Lisk Foundation therefore lent out part of their assets to multiple third parties to finance that effort. For that the Lisk Foundation carefully selected the biggest and most reputable entities to lend to, corporations which had billion dollar valuations and attracted hundreds of millions of sophisticated VC investments.
A strategy which in hindsight was a bad decision. With the fall of Luna, 3 Arrows Capital, FTX and many others the crypto industry fell into a downward spiral. Due to our internal risk analysis and fast decision making we were able to recover the majority of our assets lent out. Unfortunately, we were in long-term contracts with three entities which were affected by this downfall and either went into bankruptcy proceedings or are fighting for survival. We tried to get out of these agreements before the downfall, but it was not possible. Besides BlockFi, the other two entities are not mentioned in this financial update and won’t be due to contractual agreements in place. A total of 7,950,000 USDC were affected. For 2023 we substantially wrote them off.
6,500,000 USDC which were on BlockFi were written off by 80%, and the remaining 1,450,000 which were lent to two crypto entities were written off by 50% each.
Therefore, instead of 7,950,000 USDC going forward the amount of 2,025,000 USDC will be shown in our books, with potential further write-offs in the future.
This is a proper accounting practice and financial due diligence process, it does not mean that these funds are totally unrecoverable. We are working hard to receive back as much as possible from the above mentioned three entities. We solely have to follow the correct practices and processes.
The overview shown below depicts the overall expenditures of the Lisk Foundation for the last month and is broken down into 2 main categories: Lisk Foundation and Lightcurve.
As a solution to the current market conditions we are saving costs to bring down our burn-rate. As of December all cost saving mechanisms were successfully implemented which doubles our current run-time.
The reason why the expenditures last month were higher than usual is because in January we completely paid for the security audit for the Lisk platform launch with all products.
Bounties & Sponsorships
This covers all costs associated with the Lisk Bug Bounty Program, Lisk Grant Program, and sponsorships.
This includes all marketing-related expenditures such as public relations, influencers, merchandise, events, advertisements, Lisk Centers, and giveaways.
This includes all operational expenses of the Lisk Foundation which consist of the following: salaries, financial and legal, office rental, contractors, e.g. legal advisories, accountants, auditors, and finally taxes.
This covers the monthly invoice from Lightcurve to the Lisk Foundation. This amount is calculated using a daily rate per employee and encompasses all services provided by Lightcurve. The daily rate only applies to employees of the Research, Development, and Marketing departments. The Operations department and all miscellaneous costs are also being covered through the monthly invoice.
This includes all related costs of the Research team members at Lightcurve who are working on the Lisk Improvement Proposals.
This includes all related costs of the Development team members at Lightcurve who are working on Lisk Core, Lisk SDK, Lisk Desktop, Lisk Mobile, and Lisk Service.
This includes all related costs of the Marketing team members at Lightcurve who are working on all facets of Lisk.com, as well as managing public relations, events, business development, promotional activities, design creation, and documentation.
This includes all operational costs of Lightcurve, such as taxes, office rental, utilities, hardware/software, servers, accounting, and legal, as well as the operations and management team members. All associated costs are fully covered with the daily rates from the research, development, and marketing team members.
Disclaimer: All information contained in our monthly Financial Updates is of informational value only. Differences from their actual state may occur due to time variances of the booking of expenses and inflows. Thus, this information cannot serve as an accurate reference point for the Lisk Foundation finances.