Ecosystem Dive
Ecosystem 101
The recent shift from the perception of cryptocurrency markets as legal tender to that of an asset class is doing wonders in terms of regulation across the globe.
Countries understand that rather than perceiving crypto as a threat, they’d rather tax and benefit from it.
The crypto ecosystem is rapidly expanding. During peak bull-market season, there are almost 600 new token launches per day on just the Binance chain. Here’s a breakdown of four of the top categories making waves in the cryptoverse.
1. Smart Contract Platform
2. Exchange tokens
3. Defi
4. Bsc Ecosystem
5. Meme tokens
6. Metaverse
7. NFT’s
The Smart Contract Platform:
International trade and business is subject to many obstacles-Tariffs, legislation, local content requirements and export licenses to name a few. The aim of smart contracts is to blend all of these contractual clauses into a software that allows for efficient facilitation of the transaction.
Smart contracts are programs stored on a blockchain that run when predetermined conditions are satisfied. It self-executes when the terms between the buyer and seller, written in code, are met.
There are several benefits of Smart Contracts including greater speed, more efficiency, and higher accuracy.They enable anonymous parties to transact with each other without the need for a third party regulator with the platform including protocols that are intended to digitally carry-out, verify and execute the negotiation and running of a particular contract.
Exchange Based Tokens-
The recent mushrooming of crypto exchanges the world over means that buying and holding cryptocurrency is now easier than ever before. This, coupled with the fact that cryptocurrency regulation in many countries is still very limited or non-existent, means that opening an exchange in most countries requires crossing little to no regulatory hurdles. Cryptocurrency exchanges are of two types- Centralised Exchanges and Decentralized Exchanges.
The benefits of a centralized exchange include quick on-ramps for FIAT, practicality in terms of buying and selling, and the option to contact customer support. These exchanges use their own servers and protocols, and reduce the barrier of entry by facilitating hassle-free trading of cryptocurrencies. A noteworthy feature of centralized exchanges is that a vast majority of them require users to complete their KYC (Know-Your-Customer/Know-Your-Client) and other registration procedures in order to unlock all their services. However- with increased practicality comes reduced security, and centralized exchanges are subject to several attack vectors that if exploited may lead to complete loss of user funds.
With over $210B locked in Defi protocols, the speedy proliferation of Defi into the cryptoverse has changed the way the game is played. Decentralized exchanges work on Automated Market Makers (AMMs) to match up buyers and sellers without any single point of control. In doing so, DEXs ensure privacy, and are not subject to the rules of any specific regulatory body. Traders on DEXs do not use their identity on the exchange and may use the exchange as they decide to do so. Advantages of decentralized exchanges include enhanced privacy and anonymity, complete control of the funds remaining with users, fair and transparent trading and providing a platform for the launch of smaller projects.
Centralised and Decentralised exchanges may opt to launch their own native token.
When it comes to CEXs, these tokens entitle long-term token HODLers to lower trading fees, unique airdrops and sometimes- free withdrawals.
On the other hand, owning the native tokens of a DEX means that hodlers play a part in the mechanisms that govern the protocol, where voting rights are determined in proportion to the weight of your coin-stack.
Decentralized Finance
Defi, a term that’s thrown around by every Shmoe-Joe, includes all financial instruments built on top of networks with no central intermediary, consisting of a whole assortment of products that leverage blockchain technology. Momentous Defi use-cases include Gaming, tokenization, Lending & Borrowing, Data analytics and parametric insurance.
Why Defi?
Defi focusses on bringing back control to customers and users. Every transaction that’s broadcasted is verifiable by any and all users, putting transparency to the forefront. This also means streamlined auditing, stretching the boundaries of innovation, flexible earning opportunities and process-resilience.
Binance Chain Tokens-
The Binance smart chain network is a hardfork of the Ethereum protocol, and therefore shares several similarities with Ethereum. The aim of the Bsc network is to enable developers to build decentralized applications, while simultaneously helping users manage their assets across several chains with fast transaction speeds and low fees.
Bsc’s primary rival, Ethereum, as a network, continues to suffer due to high congestion, extortionate fees and snail’s-pace transaction times.
Bsc combines proof-of-stake and proof-of-authority in a way that enables it to be scalable, while maintaining fast finality rates and low fees. This concoction of PoS and PoA also makes it resilient to several attack vectors.
At the time of writing, including pegged tokens, there exist 1,504,644 token contracts in total.
Due course of one day, the binance chain goes through about 28,500 blocks, with the number of transactions per block far superior to that to the Ethereum chain.
Here’s a fun fact: There are roughly 6000 cryptocurrencies, 90% of which will not be present next cycle.
The Crypto Universe is only in its infancy and as a result is evolving at break-neck speeds. To stay relevant in the fast-paced world of crypto means to move and solve real-world problems. At Fruit Capital Management our investors leverage deep-data insights to extract alpha from sector cycling. The crypto asset class is nascent, with so much alpha to be extracted from its inefficiency. Come, sign up now and do more for your money and portfolio!
Stay tuned for part two, where we break down all the noise generated by Meme tokens, Metaverse coins and NFT’s !
-Siddhant Srihari,
Founder,
Fruit Capital Management Services.
