So we crashed, what next?
If you’ve ever invested you will probably agree that “this time is different” is one of the most costly assumptions you can make on your path to becoming a market master. Considering how crypto moves faster than other assets, the truth in this statement comes at you way faster and more brutal, especially if you are new. Each one of us took a hit from the recent market selloff, to different degrees at least. I am not an authority on markets but from personal experience, I can say with some confidence, that I don’t know what’s going to happen. Jokes aside, there are a lot of positives in crypto today that I could only dream of between 2018–2020. For the first time, you do not have to earn money only through trading cryptocurrencies because you can take advantage of DeFi protocols. Do you know how hard it was for me to start learning trading during the bear market after spending the entirety of the bull market researching and buying altcoin projects based on fundamentals? Projects that have been a source of slow pain death-by-a-thousand-cuts style ever since? They say the first bull market is to learn the lesson, but it does not have to be the same for you if you’re new. Yes, you might have missed the bull run, or the beginning of the bull-run, or whenever you think we are in this cycle, but at least you can now sleep for 8 hours without worrying you are going to miss the next hyped IDO. Health is wealth, right? Last joke, I promise. I believe “this time is actually different” because you could actually earn a couple of dollars quite easily through DeFi(yields adjusted of course as these will definitely trend lower when the market sentiment goes lower. Yea, defi is not the utopian silver bullet), as we hope for the bull market to resume.
There are plenty of DeFi protocols that you can use today: Compound, Yearn, Aave, Alpha Homora etc. Finally, crypto has delivered it’s first killer app. Before DeFi, every alt, Ether included, behaved like a BTC proxy, with the price hinged on Bitcoin’s strength. Due to their various use-cases, it is not preposterous to believe DeFi projects can stand on their own going into the future. If you see how Elon pushes BTC around with his tweets, you want this as much as I do. And there is a lot more from where DeFi came from. Consider, the usual suspects: Compound, Uni and all the Cronje coins as the first wave of DeFi. And this is no slight to their importance, I am only looking forward to what’s next since I missed out on them trying to understand how ichimoku clouds and Gann patterns influence Bitcoin’s price. I finally saw the light, albeit a bit later that I would have liked and started dabbing in Solidity. And I could finally understand ‘fundamentals’ when I research altcoin projects. Here is a list of exciting ideas and observations I encountered that paint a positive outlook going forward post the current market hiccup.
Plenty of ecosystems and our multi-chain future
So many ecosystems right now emerging around the two main camps: EVM compatible and Rust blockchains. We have Ethereum, Polkadot, Solana, BSC, Near, Avalanche, Dfinity, Waves and so many more- our multi-chain future is here, no single ‘coin to rule them all’. All respect to all of the blockchains, but one ecosystem I am most excited about is Polkadot. Most projects on DOT have underperformed in 2021 compared to projects on Solana, Ethereum and BSC. Relief is almost here. Gavin Wood(Polkadot and Ethereum founder) recently announced successful deployment of the first parachain on testnet. When this is successfully deployed on Polkadot, which should be soon, I believe teams would start to ship working products on Polkadot. Let the blockchain wars begin.
To put it simply: in crypto right now, talent, not money is the problem. So, if you are a developer, much better for you. Usually incentivizing builders means more hands on deck and more growth.
NFTs are much more than digital art. Some of the cool projects leading this charge do cool things such as NFT lending(adding liquidity/usage to illiquid NFTs) and tokenization of real world assets. Tokenization of real-world assets alone is a trillion dollar opportunity. Both these opportunities have no outright leading protocols. I expect to see some exciting projects building along these lines.
Oracles enable blockchains to receive off-chain data. Currently, price oracles are the most common but there are a lot of things you can do with oracles for example sharing real-world credit scores to lending protocols to be used instead of overcollateralization of our minimal capital.
The derivatives market on DeFi is quite small compared to the dexes such as Uniswap and Sushiswap. And usually, derivatives have volumes larger than spot. Currently, the leading dex derivatives are Perpetual Protocol and Futureswap, both transacting about $3B in volume last week. This figure will grow as decentralized derivatives trading grows popular.
The outstanding performance of Polygon in 2021 will definitely catch your interest. While there are other eth layer 2 projects on mainnet already, you also have a lot yet to be launched: arbitrum is launching soon, Optimism, zkSync and many more. You can buy their tokens or look at projects launching on top of them which a lot of projects will be doing to avoid the exorbitant fees on Ethereum.
Price fluctuations might distract from the building going on right now. I am confident there is a lot to look forward to in the ecosystem for the rest of the year if you do some digging or you follow launchpads that promise to deliver quality projects(they all do, do your due diligence). If I have to pick my launchpad horse for this race, am riding with Moonstarter, an upcoming multi-chain IDO launchpad. After the crash it would be cool to start everything anew. Let’s go!
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