- Token Valuation mini-series #03: Technology.
- Bitcoin uptrend broken, where’s the bottom?
- Uniswap user loses $8m in phishing attack.
- Rentable NFTs?
Good morning Banter Fam,
A quick reminder: Inflation data is set to be released at 08:30 am EST this morning. It will hold enormous implications for the markets, as noted by yesterday’s newsletter. Marketwatch.com is an excellent place to track the data.
Today we’ll dive back into the Token Valuation Mini-Series and cover the element of TECHNOLOGY. So let’s dive right in!
Technology (Token Valuation Mini-Series #03)
In the first week of this series, we overviewed the ten most important aspects of valuing a token. As a reminder:
The top ten elements of valuing a project token. (Overview Part #01)
- Use case (purpose)
- Team and technology
- Major Risk
- Growth potential
- Price upside
Last week, we covered USE CASE (purpose).
In the second edition of the Token Valuation Mini-series, we covered how to find the purpose of a project. With the knowledge to identify a project’s PURPOSE, the analyst has to turn their attention toward the TECHNOLOGY a protocol offers. If a protocol has a great use case, but the technology to offer its services stinks, then very few people will use it.
Is it technologically relevant?
Old Technology: Carriage
New Technology: Self-driving electric car
Crypto projects, at their core, are a technology that aims to improve current systems that exist in one form or another.
Some examples of technological improvements: Aave’s lending and borrowing service is similar to a bank, Uniswap is a decentralized version of an exchange, and Chainlink is a decentralized API provider (data feeds). Smart contract platforms, like Ethereum, are decentralized computers. They’re the building blocks of digital services.
All of these examples were technological advancements on a legacy service or a completely new digital service that never existed.
The first-mover advantage is real.
Many of the longest-lasting protocols in the top 100 tokens offered their technology FIRST.
- AAVE: First scalable lending and borrowing protocol.
- Uniswap: First scalable decentralized exchange (DEX).
- Ethereum: First smart contract network.
- Monero: First scalable privacy token.
- STEPN: First Move-to-Earn project.
- Crypto Punks: First community-based JPEG NFT project.
Copying the technology of another protocol is ok. It can accrue value, but ONLY if it’s an improvement.
When Uniswap devs unveiled the DEX to the cryptoverse, its token accrued a lot of value, especially during the DeFi summer of 2020. There was nothing comparable.
Uniswap was open-source, allowing anyone to copy the code and create similar exchanges. And boy did they ever. More than 20+ Uniswap V1 forks released in the next couple of months. SushiSwap, Quickswap, Vipeswap, Elk, to name a few. Very few accrued value compared to Uniswap. Those that did, improved on its features.
The magic formula for a protocol to be technologically relevant is as follows:
- DEMAND for its service.
- FIRST to offer a technology (Uniswap, Ethereum, AAVE, Cosmos, Theta).
- It has to IMPROVE on previous systems. Especially if it’s copying an existing service. (Solana, Avalanche, The Sandbox).
- RELIABLE and SCALABLE.
If a crypto project embodies all FIVE, SHAZAM!!! The protocol holds massive potential for capturing value. But don’t forget, there are nine other elements to consider.
Stay on the lookout for the next edition in this mini-series.
Market update 🌍
The crypto and traditional markets fell considerably in anticipation of the inflation print scheduled for later this morning. The White House foreshadowed a high mark by warning the public Tuesday and shifted focus to the fall in oil prices. The possibility of a decrease in inflation seems improbable.
Bitcoin (BTC) price continued to fall yesterday. It invalidated an upwards trendline (green), and nears the critical 19k support zone. Small amounts of volume back the move. Unless there’s a major surprise in inflation data later this morning (worse than expected), the support appears likely to hold. Although, be ready for anything.
While most of the crypto market continues to struggle, Polygon (MATIC), one of many layer-two (L2) solutions for Ethereum, has climbed 57% in the last 24 days. The MATIC token, behind heightened interest, appears to be in an ascending triangle pattern and ready to test the top-end support.
|US markets close||Gain|
Notable Gainers (24h):
|Protocol (Coin)||Price ($)||Gain (%)|
|Nervos Network (CKB)||0.0039||+14|
|Decentralized Social (DESO)||9.08||+18|
|Bitcoin Fear and Greed Index||15 Extreme Fear|
|“Crypto” Google Trends 90d||0|
|“Bitcoin” Google Trends 90d||33|
Uniswap phishing attack. A single Uniswap user lost $8m worth of assets in a phishing attack that targeted more than 73k protocol users. The attack claimed an airdrop of UNI tokens to liquidity providers. Once users interacted with the message, it allowed backdoor access to funds. The attacker, being tracked on-chain, appears to be moving the assets through privacy services such as Tornado Cash.
The venture funds don’t stop coming. Crypto Venture Capital Firm Multicoin Capital announced the initiation of its latest fund, Venture Fund III, and committed $430m to early-stage crypto startups.
- Animoca Brands raises $75 million at a $5.9b valuation.
- Gnosis Safe raises $100m and announces rebrand to Safe.
- Coinbase releases Coinbase Explore, a crypto-data platform.
At the protocol level ⛓
Protocol level tidbits:
- Introducing Lenstube! The open-source web3 video-sharing social media platform built on LensProtocol, is now live.
- Connext delays NEXT token drop due to market conditions.
- Introducing STFX.
NFT & metaverse update 🐵
Rentable NFTs? A new Ethereum standard (ERC-4907) has been released and allows the ability to lend and rent NFTs. The standard opens a whole new door to NFT capabilities.
Shanghai Metaverse. China’s largest city, Shanghai, allocated $1.5b towards a Metaverse Development Fund. According to Chinese sources, the fund will help create ten leading companies and 100 small-sized firms. The move will focus on moving China past a post-pandemic economic slump.
Samsung Roblox playground. Samsung announces the launch of Samsung Space Tycoon, a virtual playroom inside the metaverse game Roblox. The release showcases the continuous integrations between users of the metaverse.
- NFT exchange Magic Eden launches venture arm.
- Warner Records and Bose are set to launch NFT.
- STEPN reports $1.22m in Q2 profits.
NFT builders’ winter?
With so many NFT updates over the past few months, the potential of this sector is becoming increasingly important. Even though interest in Crypto has plummeted, it’s not stopping major firms from building metaverses and NFT projects. I’m not talking about just JPEG NFT projects. With the endless utilities of NFTs, firms are becoming ever-more creative in capturing market share. Just like DeFi was building during the previous crypto winter, the NFT sector continues to see increased builder growth. When the market eventually turns around, NFTs will be in every corner of the consumer’s attention. If you’re not taking this side of Crypto seriously yet, it may be an excellent time to reconsider. Opportunities will be rife!
Don’t know where to start? Join resident expert Hustle at Crypto Banter.
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Good morning Crypto (issued by Crypto Banter) is a newsletter for entertainment purposes only.
All opinions expressed by the publisher, writers, and chartists should not be construed as financial advice and do not necessarily reflect the views of Crypto Banter. The publisher, writers, and chartists may hold positions in the tokens and assets discussed. Readers are encouraged to do their own research.