Market Meditations | April 20, 2021
Some coins shine brighter than others.
Some coins shine brighter than others.
Here’s our topic picks.
Read, enjoy and share with your network. Let’s all build wealth together.
Crypto. Bitcoin holds support around $53k and is aided by a series of positive headlines: Binance US announces former Head of OCC as the new CEO, PBOC’s positive stance towards crypto, WeWork to accept Bitcoin as form of payment and Venmo’s users will be able to buy, sell and hold crypto.
Legacy. U.S. stocks were on pace for their first back-to-back drop since late March as investors sifted through a batch of corporate results.
Delighted to say this article is brought to you by FTX.
Yesterday was the first day in history that FTX was more than 10% of global crypto volume.
You can use my link to get a discount.
Discovering Project Serum
If you looked at your watchlist on Sunday 18 April it’s likely that the majority of your coins printed an ugly daily candle, given that the market lost $310 billion in value and liquidated participants for over $10B in 24 hours alone.
This is unless you held $SOL, which not only closed the day green but at an ATH. This relative strength can be attributed to heightened demand as the community wakes up to Solana’s fundamentals in the world of DeFi. For those who reviewed our newsletter on 16 April you were prepared ahead of time and able to capitalise on a 50%+ move to the upside in one day.
If you want to learn more about Solana, check out our newsletter article Pay Attention to Solana where we did a complete Solana 101 here. Today, however, we’re looking at a meaningful project built on Solana known as Project Serum.
What Is It?
Project Serum is a decentralized exchange known for unparalleled speed and scalability and inexpensive transaction fees. It is built by the team at FTX under the Serum Foundation and officially launched in August of 2020. The project, however, is completely permissionless which means that anybody can become a part of and contribute to the blockchain and no one person or group (including the Founders) have any special, unfair control.
What’s a decentralized exchange (DEX) you may ask?
In centralised finance, you rely on a middleman like a broker (e.g., Robinhood, eToro, etc) to secure and exchange your funds.
A DEX replaces this middleman with the blockchain, connecting you directly with other users and giving you control over your assets.
As the world of DeFi continues to explode and the Total Value Locked continues to increase, the need for better projects increases each day.
What Makes It Different?
Serum is one revolutionary project in the crypto and DeFi industry because it combines the trustless, permissionless, non-custodial and fully decentralized aspects of other DEXs with a convenient user interface that those who use centralized exchanges are familiar with. We’ve taken a screenshot of the Serum DEX this morning and pasted it below. You’ll notice that this looks quite similar to other exchanges you use, but is packed with a powerhouse of features under the surface.
Serum has 3 primary benefits: On-chain order books (sleek and familiar user interface), Speed (sub second trading and settlement) and Cost (relatively lower transaction costs)
Now let’s take a look at some of the core components of Serum in more detail:
1️⃣Cross Chain Swaps and Cross Chain Contracts
One of the biggest challenges with DeFi is in swapping tokens between two people effectively and securely. If I have 1 ETH and you have 1 BTC and we’d like to exchange, who sends the token first? Most protocols rely on arbitrators (independent nodes) that carry out the swap. Serum, however, allows users to exchange assets between chains trustlessly. They do so by using over 100 validators.
Similarly, one of the challenges with leverage trading is the need for a third party to facilitate. Serum, however, allows users to trade with leverage in a public and decentralized fashion by means of custom cryptocurrency contracts available for any product Serum has a market for.
One of the advantages of building Serum on Solana as opposed to other blockchains is that it is faster and cheaper to do so. For example Bitcoin can process 7 TPS, Ethereum 30 TPS, Binance Smart Chain 300 TPS, and Cosmos 10,000 TPS. In terms of fees, with Solana it costs about $10 for every 1 million transactions as opposed to Ethereum which would cost $300,000. In that same vein, however, Solana’s full cross-chain integration allows users to trade not only SPOL tokens (the token standard on the Solana blockchain), but also BTC, ETH, and ERC20. This is different from other DEXs.
One of the key components of DeFi is the concept of an Automated Market Maker. Automated market makers remove the need for middlemen by using blockchain based liquidity pools to ensure there’s volume and liquidity. This is made possible by way of liquidity providers and liquidity pools. Serum’s fully decentralized automated limit orderbook includes several optimizations to find and match buyers and sellers quickly and inexpensively.
4️⃣$SRM, SerumBTC and SerumUSD
$SRM is Serum’s governance token built on the Solana blockchain. There is, however, an Ethereum (ERC-20 version) so as to not sacrifice interoperability. Whilst much of the Serum ecosystem is immutable (i.e. cannot be changed), some things such as fees, for example, can be modified based on the collective vote of $SRM holders.
SerumBTC and SerumUSD are fully trustless, ERC-20 or Solana wrapped BTC tokens and decentralized wrapped stablecoins respectively. A wrapped token is simply a cryptocurrency token pegged to the value of another crypto.
For beginner traders, the concept of a DEX can be intimidating especially if this is your first experience. Serum is a great tool to get started given its familiar user interface. Likewise, for advanced traders looking to trade with or without leverage quickly and at a fraction of the cost found whilst using other blockchains, Serum may just be the solution you need.
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STAKING NEWS & ANALYSIS
Cardano Extends Staked Capitalisation Dominance
According to data from StakingRewards, Cardano is currently the top blockchain in terms of staked value, with roughly $26.4 billion worth of ADA allocated to securing the network. StakingRewards estimates Cardano stakers are earning an annual reward of 7.22%.
Solana has now surpassed Eth2 to take the third spot for staking capitalisation, with $9.4 billion in capital staked. SOL stakers are generating 11% annually.
FACT CHECK: staking is a less resource-intensive alternative to mining. It involves holding funds in a cryptocurrency wallet to support the security and operations of a blockchain network. Simply put, staking is the act of locking cryptocurrencies to receive rewards.
GETTING STARTED: in most cases, you’ll be able to stake your coins directly from your crypto wallet. Exodus.com has a simple video guide that allows you to start staking Solana within minutes. On the other hand, many exchanges such as FTX offer staking services to their users.
According to Messari, DOGE briefly overtook XRP in terms of market capitalisation on Monday. But do you know what place it briefly knocked XRP out of?
Scroll down for the answer.
MARKET NEWS & ANALYSIS
PayPal-owned Venmo Launches Crypto Trading
Payments app Square made headlines (and dollars) when it integrated Bitcoin trading into its mobile platform back during the crypto bull market of winter 2017. In today’s news, rival payments firm Venmo (owned by PayPal) is following suit.
Venmo is launching cryptocurrency trading for four major coins:
Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
Beginning today and set to be widely available within the next few weeks, Venmo’s 70 million+ customers will be able to buy, hold and sell crypto directly within the Venmo app. As an additional feature, users will be encouraged to share their cryptocurrency experiences via the Venmo feed.
The main benefit of this is that it will make crypto far more accessible and easy to use. And, of course, it indicates further mainstream adoption.
What will be interesting to now see is whether this acts as a catalyst and pressures Apple, Google and Facebook to integrate bitcoin into their mobile applications.
NFTs, Gaming and The Metaverse with Coin Artist
Coin Artist is the CEO of Blockade Games and has been involved in crypto since 2013.
DOGE briefly hit heights of $54 billion for its market capitalisation and overtook XRP for the title of 4th largest cryptocurrency.
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Disclaimer: 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.