🧘‍♂️ALERT: $9 Billion Crypto

Market Meditations | March 9, 2022

Dear Meditators

In a surprising turn of events, the crypto markets are green today and we have Joe Biden to thank:

“We must support technological advances that promote responsible development and use of digital assets” 

– The president says, in a long-awaited executive order directing various federal agencies to coordinate on policy for digital assets.

Not only has the U.S. administration previously stated their distrust of cryptocurrency but in recent events there has been concerns that Russia is using cryptocurrency to evade Western sanctions. This makes the positive sentiment in the executive order all the more reassuring. 

Consider this a significant victory for cryptocurrency.

Today’s Meditations: 

  • Introduction to Social NFTs
    • The total market capitalisation of Social NFTs is $9 billion.
  • Crypto Grain Tokens
  • Avalanche’s Latest Developments

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⏰ Top Headlines


? Breaking down the NFT market: Social NFTs

The NFT market can be almost impossible to keep track of. There are a huge number of projects, all with seemingly different value drivers. So how can we break down the NFT market to better inform our trading decisions?

For the next 4 weeks are going to dive into the 4 key sectors of the NFT market, considering their performance, sub-sectors and the hottest projects within each. To do this we will be using data from Nansen, who have collated an index to track each of these key sectors.

Social NFTs

Social NFTs focus on creating a social connection. This may be through a profile picture for social media, access to events or membership to a community such as a DAO. This is the largest category of NFTs and consists of top collections such as Cryptopunks and Bored Ape Yacht Club. Nansen uses its data to sort social NFTs by market cap, including the top 100 in the index.

Performance over 30 days

Nansen.ai:  09/03/2022 – NSN-Social100 30 day performance

  • Similar to most assets in the crypto and traditional markets, social NFTs have shown poor performance in the last 30 days, down 37% in USD terms.

Breakdown of Sub-Sectors

Nansen.ai:  09/03/2022 – NSN-Social100 Market Cap By Category

  • The total market capitalization of Social NFTs is 3.33m Eth or $9 bn.
  • There are three sub-sectors of social NFTs: Profile Pictures (PFP), Access & Membership and Utility of which PFPs are dominant.

Largest Projects

Nansen.ai:  09/03/2022 – NSN-Social100 Index Activity (sorted by Market Cap)

  • 4 of the top 5 projects are PFPs with Bored Ape Yacht Club being the largest.
  • The largest non-PFP project is VeeFriends.

Tip: Nansen also allows us to sort by floor price change, allowing us to understand the performance of individual projects.

Conclusion

Through Nansen’s NFT indexes, we are able to break down the NFT market into key sectors, understanding their performance and ultimately, boosting our ability to make profits. Social NFTs are the largest sector and are currently dominated by profile picture projects. Whilst they have performed poorly over the last 30 days, at a total market cap of over $9bn it is clear they are here to stay.


? Holy Grain

Here we go a-grain. Commodities and crypto tokens are in the news again with Santander Argentina announcing a partnership with a startup called Agrotoken. Let’s see if we can sort the wheat from the chaff:

  • Agrotoken issues tokens for every tonne of soybeans, corn or wheat produced and stored away. It is verified by major exporters in a sort of “Proof of Grain Reserve” mechanism.
  • Grain owners can then exchange these tokens in the marketplace for supplies, machinery or fuel etc., as well as just redeeming them for the market value, which tracks commodity prices.
  • Whenever grain is removed from silos the equivalent number of Agrotokens need to be burned, or a new grain certificate needs to be provided to cover the withdrawal.
  • Due to this semi-stable nature, Santander Argentina has agreed to provide credit facilities to Agrotoken holders who are “backed by their grains”.
  • Although the tokens are fungible, socio-political factors (including war) in the country where the grain is located could complicate matters.

Currently the Ethereum, Polygon and Algorand blockchains are supported. To read more about other solutions for the agribusiness check out Crop Data being used by the UAE and India, and Covantis, a large blockchain joint venture.


?‍? Blockchain As A Service

The Avalanche Foundation has announced a new incentive program aimed at stimulating development on Avalanche in the form of subnets. The incentive program is called Avalanche Multiverse and will be funded by 4 million AVAX tokens, or $290 million at their current price.

  • Subnets can use a specially designed token instead of AVAX, meaning speed and cost will be unaffected by something like a big NFT drop.
  • The subnet idea has caught the attention of DeFi Kingdoms (who will be launching another token called Crystal as a companion to Jewel) and has also received the first $15 million in incentives.
  • A second subnet will also launch to give institutional investors access to defi in a regulatory-compliant wayAva Labs will build this subnet, in a partnership with Aave, Goldentree Asset Management, Wintermute, Jump Crypto, Valkyrie, and Securitize.
  • Developers must stake 2000 AVAX tokens to create and validate a subnet. The incentives could help to cover that cost, be distributed as rewards to the subnet users, used as liquidity mining incentives, or be distributed to entities who stake tokens to validate transactions.
  • Several subnets have already been created on Avalanche.

Avalanche was launched in September of 2020 and touts itself as the fastest smart contract platform in the blockchain space. In August of 2021, they launched Avalanche Rush, a $180 million fund of DeFi incentives.


Twitter

  • Today, @POTUS signed an Executive Order on crypto-assets. I look forward to collaborating with colleagues across the government to achieve important public policy goals: protecting investors & consumers, guarding against illicit activity, & helping ensure financial stability – Gary Gensler
  • The United States just publicly said they want to be the leader in bitcoin and cryptocurrencies. The global competition is underway. (Image) – Pomp
  • I think the crypto industry is going to kind of split in two over the next 12-18 months. Basic financial regulation will increasingly be enforced on crypto funds and firms; coupled with rising competition, this will produce clear lines between the “degens” and “regulated.” /1 (Thread) – Ari Paul

Next week, we will dive into an NFT sector that is looking to shake up a $200bn industry: gaming.


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


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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