The global Web3 boom is expected to add $1.1 trillion to the Indian economy over the next decade, supporting the investment-based momentum driven by over 450 in-house startups, including CoinDCX, Polygon and CoinSwitch.
A recent study from the National Association of Software and Service Companies (NASSCOM), an Indian non-governmental trade association and advocacy group, highlighted India’s position as a leading global player in the Web3 market owing to several factors spanning a large talent pool, high adoption rate and product development for international markets.
Snapshot of India’s Web3 startup ecosystem in 2022. Source: NASSCOM
The US-India Strategic Partnership Forum (USISPF) estimated that “Web3 can add $1.1 trillion of new economic value to the Indian GDP in the next 10 years.”
Investments in Indian Web3 startups. Source: USISPF and NASSCOM
Moreover, the study highlighted that investments in Indian Web3 startups mimicked crypto adoption by racking up a 37x growth over the last two years. The explosive Web3 growth in the country is further supported by an increasing talent pool, which makes India’s demand-supply gap the lowest when compared to the USA, China and UK.
In addition, India ranks first when it comes to reskilling in newer technologies, which is considered paramount in emerging technologies such as Web3 and blockchain.
Global Web3 talent distribution. Source: OKX and NASSCOM
The above graphic shows the global talent pool for Web3, showcasing the US and China overpowering India. However, the study estimates that India’s Web3 talent pool is expected to experience the fastest growth rate in the coming 1-2 years.
Focus areas for Indian Web3 startups. Source: Zinnov CoNXT Research & Analysis
The Indian Web3 ecosystem caters to a variety of real-world applications and roughly 60% of the local startups expanded their footprint outside India.
Indian e-commerce giant Flipkart recently launched a metaverse space — named Flipverse — for locals to try out and purchase merchandise from brands including Puma and Nivea.
Flipverse was developed in collaboration with Polygon-incubated organization eDAO and will support digital collectibles and be made available on Flipkart’s newly online shopping platform, FireDrops.
A marked hostility toward new and emerging Web3 technologies like cryptocurrencies runs the risk of costing Japan its place as the world’s gaming capital. We’re getting dangerously close to the point of no return, and here’s why.
Nobody can be sure where the country’s antagonism to crypto originated or why it still persists even after the nonfungible token (NFT) and crypto “boom” of 2021, which took off in a major global way and prompted officials in the United States and Europe to backtrack on their initial antipathy for the space, finally opening up to regulations. The White House just released its first crypto regulatory framework in September 2022, and the European Parliament Committee followed up in October 2022 by approving the Markets in Crypto-Assets framework, also known as MiCA, with a landslide vote. As the first European crypto policy, the much-discussed MiCA text represents revolutionary progress in the direction of what many consider the future of the financial world.
Japan, however, has a very different stance.
We all know Japan is home to gaming giants like Nintendo and Sega and has been for decades, with triumphs such as Super Mario, Sonic the Hedgehog, the Sega Mega Drive and the Game Boy. But, in order to remain at the top of its game (pun absolutely intended), the sector needs to be able to consistently and rapidly change with the times, not stay stuck where it was when it first gained recognition. Gaming is a highly creative space and has always had the technology to back its extraordinary potential. But, in order to do so, it does need to be able to stay up to speed with new and evolving innovations, or it will become stagnant and lethargic.
GameFi is an emerging area of interest in the industry with immense potential. But, when you look more closely, there are very few Japanese companies developing the GameFi sector into what it is sure to become within a few years to a decade. And if that doesn’t change soon, the entire industry will be at risk.
The crypto and tech worlds are two of the main stages of exciting and rapidly evolving progress happening in the modern age, and in Japan, they’re being held hostage by crucial elements like taxation and a complicated screening process.
In Japan, there is no ground to account for crypto assets properly, and none of the auditors want to audit crypto assets. Due to strict listing rules drawn up by the Financial Agency, the process of listing a coin in Japan can be confusing and frustrating to a fault. But, when time is money to any entrepreneur with a brilliant idea, waiting six months for a token to be screened is unnecessarily discouraging.
Then, there’s taxation. In Japan, token issuers are taxed on unrealized assets at the end of the fiscal year, regardless of whether they have enough fiat currency to cover high taxes or not. And, while non-crypto stock profits are taxed according to a flat 20% rate, crypto earnings are subject to an exorbitant 55% tax rate, a 35-point difference.
As Japan’s reputation falters, other countries will be waiting with open arms to accept its bright minds and fearless entrepreneurs who just can’t understand why their country turned its back on them. Europe is full of investor-friendly nations with rational regulatory systems, like the Netherlands. With the new MiCA legislations as close as they are to being widely implemented, it’s not extreme to wonder if other countries would be better suited to home Japan’s brain drain.
We might indeed be seeing small improvements in the right direction. The government might be inclined to soon ease the current onerous listing rules and allow the country’s $1 trillion crypto trading market to flourish a little more easily, with exchanges able to “list over a dozen coins in one go and without a lengthy screening process.” And since assuming office in 2021, Japan’s Prime Minister Fumio Kishida has prioritized Web3 development as a means to “economic revitalization,” meaning we might witness a marked change in how the country both regulates crypto and supports the Web3 sector’s growth as a whole.
But the clock is ticking, and if only time will tell how Japan’s role in the gaming sector will impact the economy of its future, it’s hard to be overwhelmingly optimistic.
Shinnosuke “Shin” Murata is the founder of blockchain games developer Murasaki. He joined Japanese conglomerate Mitsui & Co.in 2014 doing automotive finance and trading in Malaysia, Venezuela, and Bolivia. He left Mitsui to join a second-year start-up called Jiraffe as the company’s first sales representative, and later joined STVV, a Belgian football club, as its chief operating officer, and assisted the club with creating a community token. He founded Murasaki in The Netherlands in 2019.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Web3 dominance within crypto funding rounds has been well documented by Cointelegraph Research. In addition to the Web3mega fundsannounced recently, venture capital has also been making smaller, more targeted investments in the sector. In this week’s Venture Capital (VC) Roundup, we chronicle the latest Web3 funding initiatives and draw attention to a sharding platform, nonfungible token (NFT) marketplace, crypto banking solution and co-ownership infrastructure provider.
Gamers, athletes and content creators back WWVentures
WWVentures, a boutique crypto venture firm, has raised $15 million for its Web3 fund — putting the company on track to invest in metaverse, decentralized finance and blockchain gaming startups. The funding round was backed by a slew of notable gamers, content creators and athletes, including former UFC Champion Michael Bisping and Trent Alexander Arnold of Liverpool F.C. The fund will focus exclusively on startups with a “community-first approach” to development and will aid their growth through social capital and community-building support.
Ethereum Virtual Machine-based blockchain Shardeum has received $18.2 million in seed funding from over 50 investors, including venture firms Jane Street, The Spartan Group and DFG. Shardeum is a proof-of-stake network focused on solving one of blockchain’s biggest pain points: scalability. As the name implies, the platform uses sharding — a type of database partitioning — to increase throughput capacity. Shardeum claims that its scaling capacity is superior to other layer-1 blockchains.
Avalanche-native platform rises $6M for NFT marketplace
Myna Swap, a luxury collectible marketplace that allows users to convert their physical assets into digital twins via NFTs, has raised $6 million in seed funding. Investors include Polygon Studios, Blizzard Avalanche Fund, Spartan Capital and Wave Financial. The platform, which offers trading and vaulting services, is geared toward collectors of sneakers, sports cards and watches and was built on the Avalanche blockchain. Myna Swap is set for launch later this year.
Alexis Ohanian backs Antic in $7M raise
Web3 co-ownership infrastructure provider Antic has raised $7 million in funding led by Sheva and Alexis Ohanian’s Seven Seven Six venture studio, with additional participation from Pantera Capital, Sound Ventures and Dapper Labs. Antic described co-ownership technology as an emerging concept within the Web3 community that allows companies to establish blockchain-based ownership models more easily.
Crypto banking platform closes $18M Series A
Web3 banking platform Juno has raised $18 million in Series A funding led by ParaFi Capital, with additional participation from Hashed, Jump Crypto and others. Juno provides a crypto-native checking account that allows users to bank with their digital assets more easily. Following the investment round, Juno is planning to expand its product offerings and launch a tokenized loyalty program that allows users to earn coins for taking their paycheck in crypto or spending digital assets with their Juno card.
Web3 wallet and DeFi aggregator Zerion has closed a $12.3 million Series B funding round led by Wintermute Labs, the venture arm of liquidity provider Wintermute. Zerion will use the funding to further develop its Web3 wallet by integrating advanced data and enabling better cross-chain identity management for Ethereum-compatible blockchains. Zerion claims that its trading volume has grown from $47 million in 2019 to more than $1.5 billion.
The growth of the Web3 VC industry is showing no signs of slowing down.
Polygon founder Sandeep Nailwal is the latest to join the party after raising $50 million for a new startup fund. https://t.co/XqEuvk5PV3
Web3 developer platform thirdweb achieved a lofty valuation of $160 million following its Series A funding round that landed the company $24 million. The Series A funding was led by Haun Ventures and included several notable investors such as Coinbase Ventures, Shopify, Polygon and Protocol Labs. Founded in 2021, thirdweb is developing the infrastructure layer for Web3 that could enable more seamless app development across blockchains.
Bitcoin (BTC) will top $100,000 next year but a record-breaking bear market will follow, a popular trader believes.
In a Twitter discussion on Oct. 22, Credible Crypto endorsed a theory that Bitcoin’s next halving will also see macro lows of just $10,000.
BTC bulls need only wait a year for $100,000
With consensus calling for Q4 2022 to match the end of the 2018 Bitcoin bear market, few are in the mood to call a trend change.
While a bold prediction from LookIntoBitcoin creator Philip Swift recently gave the current bear market just months to live, most commentators continue to target new lows.
For Credible Crypto, however, the really interesting territory lies further ahead — but 2023 will constitute a major turning point.
After setting new all-time highs (ATHs) of at least $100,000, BTC/USD will come down from its “blow-off top” in a way never seen before, he believes.
The next bear market will bottom out even lower than this year’s $17,600, giving buyers a chance to enter the market at as low as $10,000 as late as 2025.
“Agreed, probably in 2025 methinks,” Credible Crypto replied to the original prediction put forward by fellow trader and analyst Mr. Parabullic.
“First, new ATH in 2023- blow-off top 5th wave above 100k- followed by the largest bear market we have seen yet that is worse than the current one in both time and price- taking us to the 10-14k that everyone is waiting for now.”
Another active social media trader, Crypto Tony, found it harder to agree, calling for a macro low early next quarter, followed by a new uptrend.
From $10,000 Bitcoin to $2 million Bitcoin
Elsewhere, others have given levels between $10,000 and $16,000 as likely floor prices in the coming months.
The $10,000 price tag belongs to Filbfilb, co-founder of trading suite, Decentrader, while popular analyst Il Capo of Crypto continues to insist that $14,000-$16,000 will swiftly enter after Bitcoin sees a relief bounce to around $21,000.
“All I see is a lot of shorts that should be squeezed,” he told followers on Oct. 21, subsequently suggesting the bounce was now beginning.
“Shorting support is not a good idea. Send it to 21k. Then nuke it to 14k.”
Longer term, meanwhile, asset manager Larry Lepard is betting on Bitcoin trading at a giant $2 million per coin within the next six years.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Modern decentralized exchanges (DEXs) mainly rely on liquidity providers (LP) to provide the tokens that are being traded. These liquidity providers are rewarded by receiving a portion of the trading fees generated on the DEX. Unfortunately, while liquidity providers earn an income via fees, they’re exposed to impermanent loss if the price of their deposited assets changes.
Directional liquidity pooling is a new method that is different from the traditional system used by DEXs and aims to reduce the risk of impermanent loss for liquidity providers.
What is directional liquidity pooling?
Directional liquidity pooling is a system developed by Maverick automated market maker (AMM). The system lets liquidity providers control how their capital is used based on predicted price changes.
In the traditional liquidity pool model, liquidity providers are betting that the price of their asset pairs will move sideways. As long as the price of the asset pair doesn’t increase or decrease, the liquidity provider can collect fees without changing the ratio of their deposited tokens. However, if the price of any of the paired assets were to move up or down, the liquidity provider would lose money due to what is called impermanent loss. In some cases, these losses can be greater than the fees earned from the liquidity pool.
This is a major drawback of the traditional liquidity pool model since the liquidity provider cannot change their strategy to profit based on bullish or bearish price movements. So, for example, if a user expects Ether’s (ETH) price to increase, there is no method to earn profits via the liquidity pool system.
Directional liquidity pooling changes this system by allowing liquidity providers to choose a price direction and earn additional returns if they choose correctly. So, for example, if a user is bullish on ETH and the price increases, they’ll earn additional fees. Bob Baxley, chief technology officer of Maverick Protocol, told Cointelegraph:
“With directional LPing, LPs are no longer locked into the sideways market bet. Now they can make a bet with their LP position that the market will move in a certain direction. By bringing a new degree of freedom to liquidity providing, directional LPing AMMs like Maverick AMM open the liquidity pool market to a new class of LPs.”
How does this benefit users in DeFi?
The AMM industry and related technologies have grown quickly in the past few years. A very early innovation was UniSwap’s constant product (x * y = k) AMM. But, constant product AMMs are not capital efficient because each LP’s capital is spread over all values from zero to infinity, leaving only a small amount of liquidity at the current price.
This means that even a small trade can have a big effect on the market price, causing the trader to lose money and the LP to pay less.
In order to solve this problem, several plans have been made to “concentrate liquidity” around a certain price. Curve made the Stableswap AMM, and all of the liquidity in the pool is centered around a single price, which is often equal to one. In the meantime, Uniswap v3 made the Range AMM more popular. This gives limited partners more control over where their liquidity goes by letting them stake a range of prices.
Range AMMs have given LPs a lot more freedom when it comes to allocating their cash. If the current price is included in the chosen range, capital efficiency may be much better than constant product AMMs. Of course, how much the stakes can go up depends on how much the LP can bet.
Because of the concentration of liquidity, LP capital is better at generating fees and swappers are getting much better pricing.
One big problem with range positions is their efficiency drops to zero if the price moves outside the range. So, to sum up, it’s possible that a “set it and forget it” liquidity pooling in Range AMM like Uniswap v3 could be even less efficient in the long run than a constant product LP position.
So, liquidity providers need to keep changing their range as the price moves to make a Range AMM work better. This takes work and technical knowledge to write contract integrations and gas fees.
Directional liquidity pooling lets liquidity providers stake a range and choose how the liquidity should move as the price moves. In addition, the AMM smart contract automatically changes liquidity with each swap, so liquidity providers can keep their money working no matter the price.
Liquidity providers can choose to have the automated market maker move their liquidity based on the price changes of their pooled assets. There are four different modes in total:
Static: Like traditional liquidity pools, the liquidity does not move.
Right: Liquidity moves right as the price increases and does not move as the price decreases (bullish expectation on price movement).
Left: Liquidity moves left as the price decreases and does not move as the price increases (bearish expectation on price movement).
Both: Liquidity moves in both price directions.
The liquidity provider can put up a single asset and have it move with the price. If the chosen direction matches the price performance of the asset, the liquidity provider can earn revenue from trading fees while avoiding impermanent loss.
When the price changes, impermanent loss happens because the AMM sells the more valuable asset in exchange for the less valuable asset, leaving the liquidity provider with a net loss.
For example, if there is ETH and Token B (ERC-20 token) in the pool and ETH increases in price, the AMM will sell some ETH to buy more Token B. Baxley expanded on this:
“Directional liquidity represents a significant expansion of the options available to prospective LPs in decentralized finance. Current AMM positions are essentially a bet that the market will go sideways; if it doesn’t, an LP is likely to lose more in impermanent loss than they make in fees. This simple reality arguably keeps a lot of potential LPs from ever entering the market.”
When it comes to traditional AMMs, impermanent loss is difficult to hedge against since it can be caused by prices moving in any direction. On the other hand, directional liquidity providers can limit their exposure to impermanent loss with single-sided pooling. Single-sided pooling is where the liquidity provider only deposits one asset, so if impermanent loss happens, it can only occur on that single asset.
The European country of Spain is officially home to the third-largest network of Bitcoin (BTC) and cryptocurrency ATMs after the United States and Canada.
Spain currently hosts 215 crypto ATMs, pushing El Salvador — wi 212 crypto ATMs — down to the fourth position after surpassing the country by 3 crypto ATMs. Data from CoinATMRadar confirms that Spain represents 0.6% of the global crypto ATM installations.
Crypto ATM distribution by continents and countries. Source: CoinATMRadar
Moreover, the revelation places Spain as the highest contributor to crypto ATMs in Europe, which represents 14.65% of total installations in the continent, followed by Switzerland (144 ATMs), Poland (142 ATMs) and Romania (135 ATMs).
Crypto ATM installation growth in Spain. Source: CoinATMRadar
In 2022 alone, Spain installed 43 crypto ATMs and has previously shared its intent to install a total of over 100 ATMs by the end of the year — taking up the total to nearly 300 crypto ATMs once completed.
Greece takes the sixth spot in terms of cryptocurrency ATMs, and with the influx of tourists, Bitcoin ATM operator BCash shared insights on the usage statistics in the country.
Speaking to Cointelegraph, BCash managing director and co-founder, Dimitrios Tsangalidis, revealed that despite installing crypto ATMs in tourist hotspots, most usage comes from the main city area.
However, the island of Crete attracts a “very loyal cryptocurrency crowd,” as explained by Tsangalidis:
“There is a strong crypto community in Heraklion of Crete [which is] the location of one of our ATMs.”
According to Tsangalidis, a combination of crypto winter and tourist seasons has resulted in a slowdown in terms of regular traffic in crypto ATM usage.
Hackers took over the official Twitter account of crypto exchange Gate.io, putting over 1 million users at risk of losing funds to an ongoing fraudulent Tether (USDT) giveaway.
Social media platform Twitter serves as the most effective medium to reach the crypto community. As a result, the trend of hacking into official Twitter handles of verified accounts to promote scams is on the rise.
Hackers of unknown origin took over Gate.io’s Twitter account and changed the website URL from Gate.io to gąte.com (https://xn--gte-ipa.com/) — a fraudulent website impersonating the exchange.
The fake website is actively promoting a fake giveaway of 500,000 USDT while asking users to connect their wallets (such as MetaMask) to claim the rewards. Once a user connects their wallet to the fake website, the hackers will gain access to their existing funds and end up draining the assets.
Blockchain investigator Peckshield also confirmed the ongoing attack as it detected the phishing website and alerted users about the risk of losing private keys.
Cointelegraph reached out to alert officials about the ongoing hack and is to hear from Gate.io about related remediation. At a time when crypto scams are set to hit all-time highs, investors are advised to cross-check the website URLs of the trading platforms to ensure the legitimacy of the offerings.
The United States Federal Bureau of Investigation (FBI) recently warned that crypto ATMs are gaining popularity among scammers to receive funds from victims.
According to the FBI, wire transfers, prepaid cards and crypto ATMs are being used by scammers to avoid being tracked by law enforcement:
“Many victims report being directed to make wire transfers to overseas accounts or purchase large amounts of prepaid cards. The use of cryptocurrency and cryptocurrency ATMs is also an emerging method of payment. Individual losses related to these schemes ranged from tens of thousands to millions of dollars.”
As victims agree to pay up, the scammers ask victims to pay taxes over the original amount, “causing them (investors) to lose additional funds.”
CSPR’s price remains strong despite price facing rejection from a high of $0.055 as the price holds above the key support area.
TWT breaks out of a descending triangle as the price looks strong despite Bitcoin (BTC) dragging market prices down.
The price of CRV respects the downtrend line as the price aims to break out of its downtrend price movement.
The crypto market has not had the Uptober that many expected, as the market has continued to range despite showing some great signs of rallying in the early part of the month. Except for a few exceptional coins, such as Casper Network (CSPR), Trust Wallet Token (TWT), and Curve DAO (CRV), have shown strength despite the growing concern for Bitcoin Dominance (BTC.D) as this could affect the price of altcoins when BTC retraces. Here are 3 altcoins that have defied the pull of BTC.D.
Casper Network (CSPR) Price Analysis On The Daily Chart
Daily CSPR Price Chart | Source: CSPRUSDT On Tradingview.com
Most projects have fared poorly in the bear market, with many experiencing more than 50% price declines, discouraging most traders and investors from stockpiling these assets.
With Bitcoin’s dominance (BTC.D) rising and the price of BTC moving in a range, this has affected most crypto projects. The price of CSPR has enjoyed a somewhat good price rally. After dropping to a daily low of $0.03, the price of CSPR rallied to a high of $0.055, reclaiming its key support.
CSPR’s price needs to hold above $0.045, which corresponds to the 200 Exponential Moving Average; a close above this region could push the price to $0.077.
The daily timeframe for the price of TWT has shown resilience as the price continues to maintain its bullish strength after a successful breakout from a descending triangle.
TWT’s price faces resistance at $1.2; the price needs to break this region to rally higher; if the price fails to break this range, we could see the price retesting the support at $1.
After dropping to a daily low of $0.5, the price of CRV bounced from that area as the price rallied to a high of $1.5 before facing rejection to trend higher.
The price of CRV saw rejection as the price continued to range, forming a descending triangle with a possible breakout to a high of $1.
Daily resistance for the CRV price – $1.2.
Daily support for the CRV price – $0.65.
Featured Image From zipmex, Charts From Tradingview
Welcome readers, and thanks for subscribing! The Altcoin Roundup newsletter is now authored by Cointelegraph’s resident newsletter writer Big Smokey. In the next few weeks, this newsletter will be renamed Crypto Market Musings, a weekly newsletter that provides ahead-of-the-curve analysis and tracks emerging trends in the crypto market.
The publication date of the newsletter will remain the same, and the content will still place a heavy emphasis on the technical and fundamental analysis of cryptocurrencies from a more macro perspective in order to identify key shifts in investor sentiment and market structure. We hope you enjoy it!
DeFi has a problem, pump and dumps
When the bull market was in full swing, investing in decentralized finance (DeFi) tokens was like shooting fish in a barrel, but now that inflows to the sector pale in comparison to the market’s heyday, it’s much harder to identify good trades in the space.
During the DeFi summer, protocols were able to lure liquidity providers by offering three- to four-digit yields and mechanisms like liquid staking, lending via asset collateralization and token rewards for staking. The big issue was many of these reward offerings were unsustainable, and high emissions from some protocols led liquidity providers to auto-dump their rewards, creating constant sell pressure on a token’s price.
Total value locked (TVL) wars were another challenge faced by DeFi protocols, which had to constantly vie for investor capital in order to maintain the number of “users” willing to lock their funds within the protocol. This created a scenario where mercenary capital from whales and other cash-flush investors essentially airdropped funds to platforms offering the highest APY rewards for a short period of time, before eventually dumping rewards in the open market and shifting the investment funds to the greener pastures.
For platforms that secured series funding from venture capitalists, the same sort of activity took place. VCs pledge funds in exchange for tokens, and these entities reside in the ranks of the largest tokenholders in the most lucrative liquidity pools. The looming threat of token unlocks from early investors, high reward emissions and the steady auto-dumping of said rewards led to constant sell pressure and obviously stood in the way of any investor deciding to make a long investment based on fundamental analysis.
Combined, each of these scenarios created a vicious cycle where protocol TVL and the platform’s native token would basically launch, pump, dump and then slip into obscurity.
Rinse, wash, repeat.
So, how does one actually look beyond the candlestick chart to see if a DeFi platform is worth “investing” in?
Let’s take a look.
Is there revenue?
Here are two charts.
Algorand market capitalization vs. revenue (180 days). Source: Token TerminalGMX market cap vs. revenue (180 days). Source: Token Terminal
Yes, one is going up and the other is going down (LOL). Of course, that’s the first thing investors look for, but there’s more. In the first chart, one will notice that Algorand (ALGO) has a $2.15-billion circulating market cap and a fully diluted market cap of $3.06 billion. Yet its 30-day revenue and annualized revenue are $7,690 and $93,600, respectively. Eye-raising, isn’t it?
Algorand protocol data. Source: Token Terminal
Circling back to the first chart, we can see that while maintaining a $2.15-billion circulating market cap and supporting a wide ecosystem of assorted decentralized applications (DApps), Algorand only managed to produce $336 in revenue on Oct. 19.
Unless there’s something wrong with the data or some metrics related to Algorand and its ecosystem are not captured by Token Terminal, this is shocking. Looking at the chart legend, one will also note that there are no token incentives or supply-side fees distributed to liquidity providers and token stakers.
GMX, on the other hand, tells a different story. While maintaining a circulating market cap of $272 million and an annualized revenue of $28.92 million, GMX’s cumulative supply-side fees have steadily increased to the tune of $33.9 million since April 24, 2022. Supply-side fees represent the percentage of fees that go to service providers, including liquidity providers.
GMX cumulative supply side fees vs. revenue. Source: Token Terminal
Issuance and inflation
Before investing in a DeFi project, it’s wise to take a look at the token’s total supply, circulating supply, inflation rate and issuance rate. These metrics measure how many tokens are currently circulating in the market and the projected increase (issuance) of tokens in circulation. When it comes to DeFi tokens and altcoins, dilution is something that investors should be worried about, hence the allure of Bitcoin’s (BTC) supply cap and low inflation.
Bitcoin issuance and inflation data. Source: Messari
As shown below, compared to BTC, ALGO’s inflation rate and projected total supply are high. ALGO’s total supply is capped at 10 billion, with data showing 7 billion tokens in circulation today, but given the current revenue generated from fees and the amount shared with tokenholders, the supply cap and inflation rate don’t inspire much confidence.
Before taking up a position in ALGO, investors should look for more growth and daily active users of Algorand’s DApp ecosystem, and there obviously needs to be an uptick in fees and revenue.
ALGO issuance and inflation data. Source: Messari
Active addresses and daily active users
Whether revenues are high or low, two other important metrics to check are active addresses and daily active users if the data is available. Algorand has a multi-billion-dollar market cap and a 10-billion ALGO max supply, but low annual revenue and few token incentives present the question of whether the ecosystem’s growth is anemic.
Viewing the chart below, we can see that ALGO active addresses are rising, but generally, the growth is flat, and active address spikes appear to follow price surges and sell-offs. As of Oct. 14, there were 72,624 active addresses on Algorand.
ALGO active address count. Source: Messari
Like most DeFi protocols, the Polygon network has also seen a steady decline in daily active users and MATIC’s price. Data from CryptoQuant shows 2,714 active addresses, which pales in comparison to the 16,821 seen on May 17, 2021.
Polygon active address count. Source: CryptoQuant
Still, despite the decline, data from DappRadar shows a good deal of user activity and volume spread across various Polygon DApps.
Polygon DApps. Source: DappRadar
The same cannot be said for the DApps on Algorand.
Algorand DApps. Source: DappRadar
Right now, the crypto market is in a bear market, and this complicates trading for most investors. At the moment, investors should probably sit on their hands instead of taking kiss-and-a-prayer moon shots at every small breakout that turns out to be bull traps.
Investors might be better served by just sitting on their hands and tracking the data to see when new trends emerge, then looking deeper into the fundamentals that might back the sustainability of the new trend.
This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
An amendment to the Financial Services and Markets Bill now before the United Kingdom’s Parliament would extend the law’s powers to regulate financial promotion and other activities to crypto assets. The amendment was written by Member of Parliament and Financial Secretary to the Treasury Andrew Griffith.
The 335-page bill was introduced in July and had its second reading in the House of Commons on Sept. 7. According to the explanatory statement accompanying the amendment, it would:
“[…] clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities relating to cryptoassets.”
The Financial Conduct Authority (FCA), the U.K.’s financial regulator, published a “Dear Chief Executive” letter Aug. 9, which detailed its supervisory strategy over financial firms’ so-called “alternatives portfolio.” The letter stated: “We will publish final rules for the promotion of crypto assets once the Treasury formalises legislation to bring these into our remit.”
Most crypto-related businesses in the U.K. are not under the control of the FCA now, though they have the option of applying for registration and will be required to do so next year. The registration process currently looks only at Anti-Money Laundering and Countering the Financing of Terrorism measures and has proven challenging for many applicants.
The FCA also took action on the advertising of high-risk financial products in August, and explicitly stated that crypto assets can be risky but the agency was not yet regulating them. The country’s Advertising Standards Authority has been more aggressive in monitoring crypto-related advertising.
Griffith’s predecessor as financial secretary Richard Fuller stated in September that the government was committed to making the U.K. a “hub for crypto technologies.” On Oct. 10, the European Parliament Committee on Economic and Monetary Affairs passed the Markets in Crypto-Assets bill and a full parliamentary vote is expected soon.
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