GB Market Commentary 18/08/2021
by Alex Clark
Despite Bitcoin and Ethereum’s excellent performance this year, neither asset is anywhere close to Cardano’s return on investment, with Cardano returning 48% compared to Bitcoin's 2% and Ethereum's 1%. To put this into perspective, if you had invested in Cardano at the start of this year, you would have seen 1,421% annualized growth in the investment, whilst Bitcoin has returned only 277% and Ethereum 625% in the last year. Not only that, but Cardano’s Alonzo mainnet hard fork, which is scheduled for September 12th and is one of the most anticipated events in the crypto calendar, will help Cardano compete on equal terms with Ethereum and will tackle one of the asset’s biggest deficiencies by allowing users to run smart contracts on the network.
Dogecoin is also performing well with on-chain activity, trading volumes, and attention continuing to rise. This is demonstrated by a 16% increase in the supply held by new investors from 9% in July 2020 to 25% in August 2021. Not only that, but it is now possible to purchase a pre-owned Tesla with Dogecoin, which comes after claims by Mark Cuban that dogecoin is the best cryptocurrency as a medium of exchange. This adoption is excellent news for the crypto sector and shows just how far the technology has entered the mainstream, although Doge’s price is yet to respond to the news. Further to this, Doge’s development efforts are likely to accelerate as the Dogecoin Foundation, which has been inactive for years, has relaunched. Members of the foundation’s advisory board include Elon Musk, Vitalik Buterin, Jackson Palmer, Billy Markus, who founded Dogecoin, longtime developer Max Keller, as well as other prominent dogecoin community members such as Jens Wiechers, Gary Lachance, and Timothy Stebbing.
Solana is also accelerating fast. The asset is up 72% this week, hitting an all-time high of $73.88 today, and the Solana network passed $2 billion in total value locked for the first time. The asset’s growth is anticipated to have positive effects on Raydium (RAY), which is Solana’s version of Uniswap, and Serum (SRM), which is a decentralised exchange built on Solana.
Vitalik Buterin has openly criticised existing coin voting mechanisms, arguing that they may be holding the DeFi sector back from realizing its full potential. At present, the majority of DeFi projects manage their protocol upgrades and reward issuance using a voting system, whereby votes are distributed among token holders according to the size of their holdings, but Buterin argues this is giving disproportionate influence to whales. Instead, he is looking to Proof of Humanity based governance systems, where one vote is allocated per each of a protocol’s users, or Proof of Participation, for which voting is limited to the users of a protocol that have contributed work to the benefit of a project or its community.
Kazakhstan has been the chief beneficiary of China’s crackdown on mining operations, with the nation witnessing a 610% surge in its global share of crypto mining, from 1.4% to 8.6%, taking the nation to third place, behind China and the US. This trend is likely to continue given the nation has the lowest taxation rate among major crypto-currency mining countries.
Kazakhstan is not the only country moving forward in the crypto space, with India preparing a new cryptocurrency bill which would recognise cryptocurrency as a tradeable asset class. This is yet another example of a country that has previously banned crypto changing their approach as they see adoption grow and is more bullish news for crypto.
Similarly, emerging economies like Vietnam and Indonesia are making significant headway in the space, demonstrated by a recent survey which revealed that 41% of Vietnam’s population has purchased cryptocurrency, which is sizable given only 75% of the population have access to the internet.
Lastly, the Poly Network cyberattack saga continues for a second week as the hacker prolongs the return of the stolen funds. Poly Network previously offered $500,000 to the attacker as a reward for returning the money and have stated they have no intention of holding the hacker legally responsible and instead invite him to be their Chief Security Advisor. However, the hacker has declined the reward and refuses to provide the key to its multi-signature wallet which is needed to complete the return.