Evergrande Fallout, Tesla’s 🏭New 100 GigaWatt Factory, Solana Blockchain Trilemma

Tesla's new 100 Gigawatt-hour Cathode factory Redwood Materials should be able to accommodate the production of more than one million electric vehicles and solve the supply chain issues facing EV manufacturing for Tesla by the end of 2025. Image Source: Hyperdrive Bloomberg

1.) Evergrande Fallout and the Chinese Real Estate Market

Shenzhen-based The Evergrande Group ($EGRNF) tumbled by 85% this year and was downgraded by global credit ratings agencies. is China's second largest property developer by sales according to 2021 Fortune Global 500 List. News are dubbing Evergrande emergent of China's "Lehman Brothers" but the markets.

While Evergrande's core business is buying land and developing it into residential real estate, it is more of an investment holding company. However, billionaire founder Xu Jiayin's leverage on other businesses including hotel operations, finance, internet businesses (for real estate and automobile sales), professional sports, theme parks, mineral water and healthy industry resulted Evergrande to be over-leveraged with debts amounting to over $300 Bn. as of 1st September 2021.

Evergrande is a behemoth with a creditors including banks, contractors doing the work, foreign bondholders, local investors and homebuyers who paid in advance $1.6 Mn. for an apartment. With $300Bn. in debt according the Fitch and Moody's, the liquidity and finding access of Evergrande are shrinking severely. As the stress is now spreading to banks and financial companies, China Evergrande Group may undergo one of the country's biggest-ever debt restructurings, or an intervention by the Chinese government.

Added by Reid from Deutsche Bank, the work-out will be managed and whether [there will] be contagion is still unclear. This is a situation we along the rest of the market will be watching very closely.

2) Tesla's 100 Gigawatt Cathode Factory Redwood Materials

Tesla's Co-founder JB Straubel, CTO to Tesla for 15 years is aiming a build a new cathode factory called Redwood Materials in Nevada. According to Bloomberg, Redwood Materials is planning to not only be a battery cycling company created by Tesla Inc., but the biggest lithium-ion battery recycler in the U.S..

Today, there is still a gap between nations announcing their shift to electric vehicles and Redwood's three new facilities aims to become major U.S producer of cathodes which directly affects battery's cost, performance and environmental footprint. Last year, Tesla manufactured roughly 500,000 electric vehicles, with the new 100 Gigawatt-hour Cathode factory, it should be able to accommodate the production of more than one million electric vehicles and solve the supply chain issues facing EV manufacturing for Tesla by the end of 2025.

China is the the world's largest battery supply chain including raw material processing for EVs. In Straubel's own words ,"These numbers sound insane, but when you look at what the market needs, I'm like holy cow - is this even aggressive enough?".

Redwood Material will keep the U.S factory produce on par with the biggest producers in Asia and Redwood plans to also build similar operation in Europe by 2021.

3) Solana Blockchain Scalability Trilemma

This week, one of the fastest growing blockchain Solana faced mainnet issue as a large increase in transaction load flooded the transaction processing queue. As Decentralized finance (DeFi) is a hot topic in cryptocurrency industry, Solana's blockchain can funtction at 50,000 transactions per esconds (TPS), or 3,000 faster than Bitcoin's 5 TPS to deal with the influx of demand for Ethereum's network and lowering the cost on Ethererum.

The price of Solana has gained popularity surging from $0.75 to the high of $214.96 in 18 months and became one of the fastest growing cryptocurrencies in 2021. Like Ethereum, Solana uses its smart contract to host decentralized applications or dApps allowing for exchanges, financial derivatives and even insurance to be processed directly on a decentralized network.

Solana raised $314 Million and was backed by notable VCs inclduing MultiCoin Capital, Polychain Capital and Andreesen Horowitz to develop technology used in fast-growing area of cryptocurrency markets known as decentralized finance, or DeFi.

As most blockchains today faced a trilemma which includes decentralized, scalability and security, Singular believes Solana protocol will ultimately solve this to create the most value for blockchain technologies.