Lightspeed Newsletter: Solana-based mineral rights platform scores funding

06.08.2024

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Howdy!

August 5, already! July was a blip.

Time to get serious about finishing that summer bucket list. There are only so many more nights for grilling hot dogs on the roof. Anyways:

Elmnts scores pre-seed funding for mineral rights platform

Elmnts is a Solana-based platform for tokenizing mineral rights, which are the rights to extract underground resources like oil and natural gas. The startup has raised $2 million in pre-seed funding at a $20 million valuation, it told Lightspeed exclusively.

The round was led by Graph Ventures, Foundation Capital and B+J Studios.

45% of the funding will be used on “development” and 30% will go to “legal/regulatory,” according to an investor pitch deck that was shared with us.

Mineral rights can be pretty lucrative, particularly when it comes to the gas industry. Oil and gas producers have to pay property owners a 25% royalty in many parts of Texas. The US government hauled in $2.9 billion from royalties on oil and gas extracted from federal land in 2019.

The issue, Elmnts co-founder Odai Ammar explained in an interview, is that most mineral rights are being “gobbled up by private equity” since there are only a couple auction venues where mineral rights come up for sale, and the minimum buy-in for solo investors would be in the ballpark of “a few hundred thousand dollars.”

Elmnts tokenizes a fund that holds a collection of mineral rights assets, and investors can buy shares in this fund. The operation is kept compliant via Solana token extensions, which are features of Solana’s SPL token standard that let issuers code things like confidential transfers and delegate authority into their tokens to meet requirements from regulators.

Elmnts’ whitelisted Series 1 fund comprises $400,000 in oil and gas rights on two drilling sites in Texas. One is operated by Chevron and one by ConocoPhillips and Mewbourne Oil Company, according to documents shared with us.

Elmnts hopes to bring on a second fund within two weeks, Ammar told me, adding that the startup is planning to open to the public at the Solana Breakpoint conference in September.

Ammar said that while the Elmnts mineral rights funds will be permissioned, the “other side” — which is an Elmnts-built lending protocol called Atoms — will be permissionless. Essentially, Elmnts investors can collateralize their oil and gas tokens so they can be borrowed against in DeFi, which makes the system more liquid.

Ammar added that down the line, Elmnts is aiming to capture energy from flared gas, which is natural gas that is burned during oil extraction, and use it to power mobile bitcoin mining stations.

Elmnts will slot into a tokenized commodities space that is currently dominated by tokenized gold products offered by Tether and Paxos, according to rwa.xyz. The pair have a combined market capitalization of over $900 million.

— Jack Kubinec

Zero In

1200%

That’s how much you’re still in profit if you bought Solana at its $10 low back in January 2023. Sure, prices have dropped around 33% compared to this time last week; $130 today compared to $193 seven days ago. But it’s all relative.

If you’re new here, the sky is falling. For long-term HODLers, it’s barely even turbulence.

— Jeffrey Albus

The Pulse

When candles are red, I cope by speaking solely in pop culture references.

The price? Inconceivable. I mean, it must be high or low. That’s no moon. The plumage don’t enter into it. It’s stone dead. This isn’t flying, it’s falling with style. A bit of the old ultra violence. Look how they massacred my boy! Malkovich Malkovich Malkovich. I am Jack’s inflamed sense of rejection. Two little mice fell in a bucket of cream. You’re tearing me apart, Lisa!

Others appear to have healthier ways to deal with stress.

User @streetdebt offered optimism, saying: “If you think Solana at $115 is attractive, it will be more enticing at $15,” while Helius CEO Mert Mumtaz copypasta’d “Dear noobs, $SOL is NOT naturally going down. It is being pushed down via whales placing spoofy sell orders on exchanges…” Watching the price decrease, @Teeznutz11 acknowledged “Not enough drugs in the world to make me open my solana wallets right now.” Other’s, like @heyzuesx and @gafarWeb3, kept things short with supplications such as “please stop” and “God help us all.”

Misery and woe found their voice in users like @timetofud who wept “this whole market is a scam, i hope it goes to 0,” while @NFTwap snapped, “Everyone selling eth and solana rn is a fat ugly miserable loser who goes to Disneyland in their 30’s and their teeth is all gum line.” Jupiter Exchange’s @Weremeow went full chaotic neutral, advising “Absolutely crucial time to double down,” as @tflo__ asked “Who would sell either of these when you could just trade them for memes?” Meanwhile, @FamousCloudzz beat me to a Scorsese quote with “IM NOT FCKN LEAVING.”

I’m sure this is fine.

Now, if you’ll excuse me, I have to return some video tapes. But I’ll be back. Because life, uhh, finds a way.

And my hunch is, when this baby hits 88 mph, you’re gonna see some serious shit.

— Jeffrey Albus