GB Weekend Market Commentary 05/11/2021
by Nick Heale
Welcome to the latest instalment of the weekend CryptoInsight.
Last time we looked into the Metaverse and it's incredible how much the hype around the industry has built since then. Since the mention in the last instalment, Facebook has rebranded to “Meta” and Decentraland (MANA) has risen in price by more than 300%according to Coinmarketcap. Things move quickly in the crypto world!
One question we could ask ourselves is how does this Metaverse exist, well at least virtually? This is where the underlying blockchain networks come in which will be the focus of this weekend's article.
Blockchains enable interaction with metaverse environments so that you can purchase virtual real estate, buy the coolest fashion items for your avatar, or even bet on a virtual horse race!
The most well-known blockchain is Ethereum, which continues to consolidate its position as the second largest cryptocurrency with a market capitalisation in excess of $500bn. Ethereumthough is a victim of its own success because the network is often clogged due to being overloaded with transactions which result in very high fees to use.
This has led to polarising opinions on Ethereum and to the development of “layer 2” solutions which interact with Ethereum to overcome the costs of transacting. Polygon (MATIC) for example enables interaction with the Ethereum network but with very cheap fees. Indeed, if you happened to receive any free airdrops into your crypto wallet from attending the theDecentraland Festival these would have been sent to you over the Polygon network! Other networks such as Fantom (FTM) and Avalanche (AVAX) also interact with Ethereum network and offer cheaper faster transactions.
It's not all about Ethereum though. Recently other blockchains such as Solana (SOL) and Polkadot (DOT) have been in the news and have seen rises in the price of 21% and 19.5%respectively since the last instalment for different reasons, however.
Solana has recently leapfrogged Cardano (ADA) to be the closest pretender to Ethereum and has a growing ecosystem for NFTs, DeFi and metaverse gaming which can benefit from the fast economical blockchain characteristics Solana possesses.
Polkadot’s story is somewhat different in that its recent successes can be attributed to the forthcoming parachain auctions which kicked off today with the Acala Network which aims to become the cornerstone of Polkadot’s DeFi ecosystem. I defer to my colleague, MarcusSotiriou’s recent deep dive on this blockchain which is a worth read!
I hope you have an enjoyable weekend!