@Eco_eco - is Terra Luna on your radar? What do you think of the risks involved? You mentioned you were interested in altcoins, what are your criteria?
Thanks @Rosy - is really great to have a chance to talk about strategy, rather than just a back and forth on crypto as a whole. I’ve very much appreciated your lifting the tone in each post on this thread.
I think Terra and their sub products (Mirror and Anchor) have real potential. There are a couple of good podcast interviews with their founders that give insight into their goals and how they have set up their business. They are on my list for investment, once I’ve built out my position in a few other protocols. I’m also waiting to see how well they do over the next six months as Korea goes through one of is periodic crypto contractions.
Their exposure to Korea is a good thing. They are well positioned for growth throughout all of south east Asia and like you said their coin is used by millions of people for everyday payments. But the value of LUNA is really hard to pick because Korea is its own crypto market which has a lot of swings. I don’t care that much about the price though I’m a long term holder by nature. I’m here for the network rewards and income, not capital growth. I don’t try to time the market much or pick the next big winner.
Here’s my take on network coins including Luna - this describes how I’ve chosen to invest in this part of the market and my picks for this crypto cycle:
Premise Over the next few years the network layer segment will mature. It’s not yet clear if this will end up with one or two big players with most of the global network activity, or if the market will be more even with many smaller to mid size networks.
For 2021 I’ve developed a ranking system to guide our investment choice:
A grade - ETH: the global computer:Over 2019, 2020 and 2021 Ethereum has proven how much of the value of transactions in the Cryptoverse can end up in underlying network layer (unlike say the Internet when most of the value sits at the application layer). This makes investments in the network worthwhile. ETH has significant first mover advantage and its ecosystem is very mature. This locks in value as apps like Uniswap wouldn’t really function if there weren’t so much demand to swap the many many tokens which all sit on Ethereum’s network.
However, we are rapidly approaching interoperability where the choice of network doesn’t matter and tokens can be traded on whichever network offers the lowest fees. Likewise layer two solutions will soon be easy and reliable enough to avoid using the Ethereum network for the large majority of transactions.
When this happens it will be interesting to see what happens to ETH. There is a talk of ETH transitioning to become a store of value similar to bitcoin, once there is little reason to use ETH and pay its network fees.
Because of this I hold short term bullish and long term bearish views of ETH and don’t think its wise to hold only ETH as your network play.
B grade: BInance chain (BNB), Cardano (ADA), Polkadot (DOT)
I think these three make up a strong second tier. All three are very likely to take a big portion of the overall crypto network transactions in 2021 and 2022. Each one has a slightly different strategic position. I’m basically as bullish on these three as I am on Ethereum.
BNB - Binance has proven to be a very strong player with a commitment to building out its network over many years. It has the size, income and market presence necessary to build an ecosystem. Its also basically bought network activity over the past 24 months by heavily incentivising projects to use the Binance chain. This is just proving itself now as the Binance chain based DEFI sector starts to scale.
ADA - Cardano operates as a corporate entity which is looking to beat the incumbent at its own game. ADA is going after Ethereum in a very blatant way - by the end of this year smart contracts on ADA will be interoperable and easy to code without having to learn solidity. Cardano is also very active in making itself attractive to business and government platforms - it is leveraging its ‘academic’ first approach to sell ADA as reliable and well founded. The academic rigour applied to the network makes it very attractive to people who are rewarded by choosing stability over innovation (such as people setting up projects for nationstate).
DOT - Polkadot is moving fast, and in doing so is capturing developer excitement and energy. There will be a lot of cudos and market opportunity for projects that capture one of the first 100 slots in the parachain (as we’ve seen with Kusama).
C grade: Avalanche (AVAX), STELLAR (XLM), Terra (LUNA) and Ripple (XRP)
I rate AVAX, XLM, LUNA and XRP as projects which could succeed and end up as major players, but which have not yet hit critical points of maturity to safely indicate they will thrive in the coming few years.
AVAX - is a great project with a fantastic founder, but I haven’t found the unique value proposition for the network which would make it more than just another great project.
XLM - is very likely to succeed if its enterprise model pays off, but (like with Ripple) I don’t know how much of the transaction value will end up with XLM holders.
XRP - the same as Stellar, but with legal and governance issues which might slow its innovation growth significantly.
LUNA - is a bit of an outsider but has captured a lot of the network share in its home market of Korea, and is now adding DeFi and synthetics to its ecosystem. It’s not well placed to incentivise teams to use its network and I haven’t found it capturing developer ‘mindshare’ and I think this will hold it back. But it is underpinned by a very strong payments network and usage of its payments app. It might turn out to gain value in the retail space, rather than as a network layer project.
You could also put SOL in this category - SOL is new but evolving fast and has a lot of support from the FTX exchange.
D grade: EOS, WAVES, TEZOS, IOTA, NEO
Each of these are lagging behind the other projects in this list. Both EOS and Tezos raised huge amounts in the ICOs and have sufficient funding to last for years, but both do not seem to have used this in any meaningful way yet. WAVES looks to be largely dead in the water, with only the occasional spark of life every now and then. NEO continues to lag. IOTA has a hard journey ahead for adoption as its chosen a different technology to solve the challenges which blockchains address.
While each of these five might surprise and could be bubbling away with secret developments that haven’t been announced, they seem to be falling behind in the part of the Cryptoverse which has made huge progress over the past few years and which it is very likely we will see a few dominant players capture most of the market.
None of this is financial advice - it’s just my take on this part of the ever growing crypto marketplace.
Sent from my iPhone using Tapatalk