🧘‍♂️ALERT: Watch This Crypto

Market Meditations | January 19, 2022

Too many people forget to…

Dear Meditators

Establishing trending layer 1s was a huge source of profit in 2021. 

We have already covered recent inflows into the Avalanche and Fantom ecosystems however today we will look at the first low cost layer 1 chain to take significant market share from Ethereum: Binance Smart Chain (BSC). 

Read, enjoy and share with your network. Let’s all build wealth together.

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⛓️ Block Party

Perhaps inspired by our story on Idan Abada’s Starbuck’s-funded crypto mining, individuals continue to hook their computers up to the network with dreams of hitting the jackpot – a block reward. As it happens, three people have done just that in the last week:

  • Mining requires solving an iterative calculation, where people with the most computer power have the highest chance of winning. 

  • Individuals can either join mining pools or solo connect to the network – the latter provides less regular income but can still avoid the overhead of running a full bitcoin node or paying fees to a pool.

  • Last week two solo Bitcoin miners running on Solo CK independently secured a block with only ~120 TerraHashes per second (TH/s), each receiving rewards of 6.25 BTC plus transaction fees.

  • Given that the Bitcoin hash rate is currently over 180 exahashes per second (EH/s), these winners each had about 0.00007% of the network power – odds of 1 in 1.4 million!

  • That said, the odds of winning the lottery are in the 10s or even 100s of millions, so solo mining actually provides a 10x better chance comparatively!

  • Continuing the winning streak, another solo miner won an Ethereum block on Monday, securing a 168 ETH reward despite holding only 0.0002% of the hashrate. 

As traders we may not be rushing out to buy mining gear, but given this news and the fact that Intel will be unveiling a new mining chip next month, it’s good to be aware that we may see this reflected in the market. To understand more about hash rates, check out our summary here.


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. 

? Binance Smart Chain: Smart Enough to Beat Ethereum?

Step 1: Establishing the Strength of the Layer 1 Chain

(1) Transaction Volumes Compared to Ethereum

Transaction volumes can be used as an indication of how much activity there is on a chain and therefore, as a proxy for adoption. Nansen allows us to compare the number of transactions on Ethereum to those on other chains, such as BSC:

Nansen.ai: 19/01/2022 – BSC Active Addresses

  • BSC currently processes over 5x the number of transactions than Ethereum, demonstrating a large amount of activity on the network. 

  • However, at its peak, it processed over 10x the number of transactions, an indication that adoption is declining at a faster rate than Ethereum.

  • It is worth noting that Ethereum’s total value locked is $137bn whereas BSC’s is only $14bn (source: DeFi Llama). This would suggest that the network favours individuals with lower amounts of capital.

(2) How Many Smart Money Addresses are Active on BSC?

Using Nansen we are able to consider how many addresses considered as smart money on the Ethereum network, are also active on the BSC network.

Nansen.ai: 19/01/2022 – Smart Money Segments on Binance Smart Chain

  • Many of the smart money segments (defined by Nansen here) have a crossover rate of over 35%. 

  • In comparison Avalanche and Fantom have significantly fewer overlaps – indication that more Smart Money has been attracted to BSC than these ecosystems.

Now we have established that Binance Smart Chain has continued to display significant levels of adoption, we can explore the ecosystem itself.

Step 2: Diving Deep into Opportunities within BSC

Most Used Protocols over 7 days

Nansen.ai: 19/01/2022 – Most Used Protocols on BSC Number of Users

  • PancakeSwap: This currently has the most number of users and is a decentralized exchange that allows you to trade crypto assets (including NFTs) and earn yield through farming.

  • Binance: This is the creator of BSC and the largest exchange in the world. Binance allow you to withdraw and deposit directly from the BSC network.

  • Bomb Crypto: This is an NFT game that has been played by almost 300,000 people in the last 7 days.

✅ Tip: Nansen’s hot contract feature allows us to find the hottest opportunities in real time by showing which smart contracts are receiving the most amount of capital.

Conclusion

There can be no doubt at the amount of opportunity within the Binance Smart Chain ecosystem. It is hugely popular for individual investors that do not have the amount of capital to be profitable on Ethereum and continues to display large levels of adoption.

Whilst the layer 1 narrative has driven the adoption of various alternate ecosystems, many failed to recapture their initial hype. Binance Smart Chain however has shown strong resilience and demonstrated that it is here to stay.


With Nansen’s On-Chain data, you can secure an edge in the crypto and NFT markets:

  • ? Exciting New Opportunities. See where funds are moving their money.

  • ? Perform Due Diligence. Get more information on projects or tokens.

  • ? Defend Your Positions. Create smart alerts to track over 100 million ETH wallets.

  • ? Track The Biggest NFT Traders. See what the most profitable NFT wallets are investing in

To grow your crypto portfolio today check out the Nansen website. Currently, they are running a 7 day trial for just $9. Link here ?


?️ Highway To NFT Adoption

It would have been hard to anticipate how quickly the crypto community would accept NFTs as a store of value, especially if you were an original Punk or Mooncat holder. 

While those projects may have waited a few years to see their value rise, 2021 was the year of the NFT. But for all the growth that NFTs have seen, there are still millions of people who won’t set up a crypto wallet and buy crypto to purchase one, and maybe they won’t ever have to if Coinbase or OpenSea have anything to do with it.

  • OpenSea, recently valued at $13 billion, just announced their acquisition of Dharma Labs, a defi startup. According to OpenSea co-founder Devin Finzer, “Our teams share a vision that NFTs will be the cultural focal point of crypto’s adoption for years to come-and that vision can only be realized if using NFTs becomes easy & delightful for the average person.”

  • Part of the deal included appointing Dharma co-founder Nadav Hollander, a former software engineer at Coinbase & Google, as CTO. OpenSea hopes this acquisition will help them create an on-ramp to NFTs.

  • Meanwhile, Coinbase, the company that on-ramped many crypto users over the years, is also hoping to be the normie on-ramp to NFTs. Today Coinbase announced that they have partnered with Mastercard to allow users to purchase NFTs with their Mastercard on the upcoming Coinbase NFT marketplace.

We all know that NFTs have a bright future, but when companies like Mastercard, Coinbase & OpenSea work together (even in competition) to make ‘buying an NFT as easy as buying a t-shirt’, the possibilities are endless.

If removing the barrier to NFTs makes you feeling bullish, check out our dedicated NFT section in the Ultimate Crypto Wealth Guide to help you navigate the scene now. 


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??‍♂️✍️ Stories in this newsletter were written by D. Beverly, Isambard 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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