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Market Meditations | March 22, 2022

Dear Meditators

Cryptocurrencies experienced a rally today as expectations of a rate cut in 2023 alongside renewed hopes of greater institutional demand outweighed risk-off sentiment.

Today’s Meditations: 

  • Updates and Lessons from ApeCoin
  • Latest on Ocean Protocol
  • Regulation Deep Dive

⏰ Top Headlines

? Who Let the Apes Out?

Last week an airdrop tied to the Bored Ape Yacht Club (BAYC) ecosystem went live with ApeCoin ($APE). The coin has a fixed supply of 1 billion tokens, 150 million of which (15% of total supply) was released via an airdrop.

This was certainly one of the most anticipated and profitable airdrops to date. At the peak price of $17.17, a single BAYC would have received $173,313 (approximately 60 ETH) for free! To learn more about ApeCoin check out last week’s article which broke the news here.

@justintrimble discusses the history of airdrops in a recent thread here. From the data, it is clear to see airdrop tokens tend to have similar price action. Upon release prices tend to form a parabolic uptrend a short period after the token has initially been airdropped followed by a steep decline in price.

The only real cost when participating in reputable airdrops is your time spent researching. Receiving airdropped tokens is often seen as free money as you often get rewarded just for interacting with a platform. An easy way to identify airdrops is by referencing CoinMarketCap’s Airdrop page.

Like all investments, there are risks associated with participating in airdrops. These include but are not limited to:

  • Sell-off Risk: a sudden high-volume sale, causing the price to crash, at least in the short term.
  • Phishing Attacks: often taking the form of misleading emails, text messages, or social media posts to trick people into responding with private information or transferring funds to an attacker’s wallet.
  • Dusting Attacks: this is when a trace amount of crypto is sent to thousands of wallet addresses. This attack is deployed with the hope of de-anonymizing the wallet owner, this is more of an annoyance than concern as your funds are safe.

Given these risks, many participants create and designate a separate wallet when participating in airdrops. Participants (particularly whales) sometimes create multiple wallets to receive more tokens than they are entitled to. However, DAOs now can keep these participants in check.

On March 16th JUNO was released via an airdrop with a cap of 50,000 tokens per one wallet or person. A whale had exploited the smart contract to receive more and attempted to hide its actions amongst 50 different wallets. They were discovered and the DAO voted to strip the participant of all but the 50,000 JUNO tokens they should have received.

? The Next Wave

Are there more drops in the ocean or data bytes in the world? Both are vast in their own way, but only one of them is growing at an exponential rate, doubling every couple of years. And with that growth, will the stranglehold of big data companies tighten as we sail towards an unavoidable dystopian future? Not if DeFi has something to say about it…

  • Decentralising data is a mammoth task, but one that the developers of OCEAN Protocol have been working on since 2017.
  • Sometimes people want access to specific data for a specific timeframe but are forced to buy a whole dataset outright.
  • Data marketplaces could help solve this while also benefitting smaller businesses and entrepreneurs, who can now earn from their data.
  • OCEAN tokens can be earned by: 1) providing data; 2) providing liquidity; 3) creating a data marketplace for others on the protocol.
  • The price has rallied recently due to the impending launch of v4, which will include NFTs to manage data IP.
  • However, data privacy compliance remains an important factor that will need to be managed.

To learn more about how Ocean monetises data using blockchain check out their academy. And if you’re still wondering, there are more drops in the ocean than bytes in the world. But that is all on course to change in the next decade.

? Regulation News From The Land Down Under 

Australian Senator Andrew Bragg has proposed a regulatory framework for the crypto industry at Blockchain Week 2022 which he hopes will show Australia’s willingness to play a more prominent role.

  • The proposed Digital Services Act (DSA) will target crypto custody, de-banking, taxing and have a particular focus on decentralised autonomous organisations (DAOs) operations.
  • Bragg believes that DAOs pose “an existential threat to the tax base” under the current rules.
  • According to data published by the Parliament of Australia, company tax accounts for the second-largest source of revenue for the government behind income tax.
  • The Senator also said “reliance on company tax is unsustainable” should the number of organisations acting as DAOs increase.
  • The DSA would task the government with creating a framework that allows the government to generate tax revenue without damaging the core principles of DAOs.

Showing willingness to fairly regulate the crypto industry is important as according to a survey from pollster Finder, 22.9% of Australians own crypto.

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??‍♂️✍️ Stories in this newsletter were written by Isambard FAKai.A, 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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