🧘‍♂️ALERT: 2 Profitable Cryptos

Market Meditations | January 6, 2022

With Key Analysis & Insights

Dear Meditators

Today we focused our attention on 2 profitable cryptos: Bitcoin and PancakeSwap.

Today’s Meditations: 

  • Top Crypto Headlines 

  • Introduction to AMMs: What are they, Pros & Cons, How to get started 

  • BTC Price Action: Uncover what really happened 

  • Metaversal Puzzle

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⏰ In A Rush?

Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool. 

?AMMateur Hour

One of the keystones of the decentralised finance movement is the removal of intermediaries and custodians from the entire monetary system. 

One of the most important parts of the DeFi machine is the Automated Market Maker (AMM).

  1. Decentralised Exchanges (DEX) achieve this goal by employing automated market makers to incentivise users to provide liquidity to pools in an exchange for a rewards 

  2. These rewards are produced by fees other users pay to patronize services offered by the AMM, like exchanging one token for another.  

  3. While centralised exchanges oversee the operations of traders, acting as the middleman between two parties desiring to make an exchange, AMMs utilise an approach employing the execution of smart contracts instead. This automates the process without the need to trust a centralised entity. 

✅ Tip! A liquidity pool (LP) consists of two different tokens. These assets are provided by users in designated pairs, USDT and ETH for example. When a user wants to exchange USDT for ETH, the pool facilitates the transaction. A fee is charged to the person making the swap. A portion of that fee is then used to reward providers of liquidity in that pool.

AMMs and the DEXs they serve are some of the most popular tools being used in DeFi.

PancakeSwap is a popular decentralised exchange reliant on the function of its AMM. Its position as the leading AMM on the Binance Smart Chain contributes to its status as one of the most popular DEXs. 

  • PancakeSwap facilitates swapping and trading without the need for including a centralised exchange. 

  • Yield farming/liquidity mining is a core attraction of users to the platform. Providing liquidity earns LP tokens, which carry with them rewards in the form of trading fees. 

  • LP tokens can also be locked in a smart contract to earn $CAKE – PancakeSwap’s native token. 

  • PancakeSwap, like many other DEXs, affords the opportunity to participate in initial offerings for different project and token launches. 

Understanding automated market makers and how they work should be an essential part of due diligence. 

Many models exist, with a few claiming responsibility for the vast majority of DEXs out there. It’s always important to know how the mechanics of platforms function to accurately assess the long-term growth and sustainability of an ecosystem.

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? Break Poi-NFT

Which Tennis Grand Slam Tournament has been the first to release an NFT collection?

  1. Australian Open

  2. French Open

  3. Wimbledon

  4. US Open 

? Down Goes Bitcoin! 

Last night, bitcoin plunged making it below $43K! While most of the time there is not one sole indicator as to why price rises or falls, let’s take a look at the top 3 most likely indicators for this recent price action. 

  1. Federal Reserve’s comments

  • Notes from the Federal Reserve’s December FOMC session re-confirm plans to get the balance sheet under control – most likely by raising interest rates

  • If the balance sheet is not “under control” then bitcoin becomes a great hedge against inflation. 

  1. Hashrates fall amid Kazakhstan internet shutdown.

  • Amid protests caused by fuel costs, the country cut access to the internet

  • This impacted major bitcoin mining pools and while it is not as big as China’s crackdown, Kazakhstan is home to as much as 18% of the world’s hashrate.  

  1. Liquidations. 

  • Both instances above can lead to a rapid fall in price. When this happens, this can set off a cascade of liquidations

Is this the end of bitcoin?

No. We must remember that this is a marathon and not a sprint. With the news provided above, it is likely going to have a bigger effect in the micro than in the macro when talking about price action. 

1. Australian Open

The tournament is releasing 6776 NFTs that correspond to tiny points on the court’s surface.  

  • 600 of them are the winning shot of each match, of which the footage will be airdropped to their respective owner after the match concludes. 

  • If the winning shot happens to be a championship point, the owner will be given the physical ball held in their own personally engraved case

  • The position of the NFT will be decided after its minting on 13th of January (essentially if you buy it, it’s a lottery of which one you receive).

But that’s not all, they are releasing a virtual event in none other than Decentraland! Be sure to check it out especially if you are unable to attend the event in person.  

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??‍♂️✍️ Stories in this newsletter were written by Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.

Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.

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