At the time of this writing, DAI price has been hovering around 1 USD for about 3 months, but in the last few weeks we’ve seen a lot of trades occurring at 1–3% above the peg. In our view, upward pressure on DAI price is due to number of reasons, the main one being that DAI demand has picked up while sell pressure from leverage traders has lost some steam.

All the charts below can be accessed at

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DAI demand is extremely hard to estimate. It is measured not only by looking at increased bids for DAI on exchanges, but also by the amount of DAI that is passively held by people. Namely, passive holdings work as short term sinks, effectively taking DAI out of circulation and creating upside price pressure. …

Currently, there is a lot of debate over whether the stability fee as a policy rate for borrowing DAI and backing it with ETH properly represents market dynamics within the MKR ecosystem. MKR works in such a way that the stability fee is voted on, not defined by markets — something like what central banks do, but in a decentralized fashion.

I believe the best way to assign an interest rate to any asset is to look at what the market is signalling. …

When I used to help Iconomi with building their fund management platform I always wondered if decentralized asset management on the Ethereum blockchain would ever really work. I also wondered how effective it would have to be to attract users, particularly after seeing how complicated things were when we were building the platform on a centralised infrastructure.

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Over the last two years, I have kept my eye on promising decentralised platforms such as Melonport and Prism by Shapeshift.

Melonport looked like there was more marketing than actual execution and two years since their ICO there is still no product on the mainnet, despite their secondary ICO. Although they are supposed to go live in February 2019, I have since lost a lot of faith for their product. This is primarily because they were not able to deliver a product until now despite an abundance of capital raised. I also get distracted by teams who are more into marketing and attending conferences than building things. There is also news the company is shutting down and leaving protocol development to the community, potentially due to most of the ICO money being spent, their non-compliant fundraise or a shakeup in the founding team. …

Crypto markets have taken a continuous beating since the beginning of the year. The whole crypto market lost 75% of its value and the current daily market volume is $11B, a measly 15% of the all-time-high daily volume back in January of this year, when it peaked at $72B.

The fluctuations of value in the crypto markets can have direct impact for treasuries of projects that raised millions in ICOs at the beginning and throughout the year, so our team had a deeper look into the data¹ and tried to find a few reasons for Ethereum’s performance and what it means going forward.

1. ETH is Not Under a Significant Sell Pressure from ICOs

Recent articles were giving an impression that ICOs are increasingly sellingtheir ETH. This was not confirmed by our research, which shows that 100k of sold ETH in the past month is just one-third of this year’s average monthly selling of ETH. …

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Crypto industry experts spend much of their time studying which stablecoin may become adopted and the set standard for stable transaction of value. We all agree on why stability of prices is needed in crypto, but rarely ask ourselves how price stability is actually perceived by consumers. This is very important as consumers will determine what gets adopted or not. In relation to this, go-to-market strategy needs to be properly addressed.

Currently we have three types of stable tokens — non-collateralised and decentralised (Basis), collateralised by central entity using USD (Tether), and collateralised in a decentralised manner using crypto assets (Maker). …

Last week a research firm Bernstein published a report stating that the Chinese bitcoin mining company Bitmain made between $3 billion and $4 billion operating profit in 2017. The estimated profit even exceeds the profit of leading graphic manufacturer Nvidia, which saw high growth of sold GPUs in last year due to mining demand led by retail.

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When it comes to Bitmain and its mining operations, the crypto community often reacts negatively towards such news as one of Bitcoin’s main attributes is also decentralised mining. Namely, Bitmain controls about 70% of all mining rigs for Bitcoin through its control of special mining devices ASICs. Further, it controls the largest mining pools and even mines for its own account. …

In one of my previous blogs I tried to highlight the importance of the structure of token holders and its impact on token price dynamic. As many, including Vitalik, in the industry later observed, tokens are very much multi-equilibrium game. The price dynamics of a token that enables access to a particular service depends mostly on the demand of users willing to use that service. But users don’t perceive token only as a means to access a particular service. They may treat it as an investment or a store of value and act as passive holders or investors. …

Bitcoin $10k! For those of us who have been in crypto for some time, such a headline was something we all somehow expected to happen sooner than later toward the end of this year. I didn’t think it would happen before December, but crypto has proven me wrong many times.

Bitcoin’s price surge is partially associated with the listing of bitcoin futures by the well-known U.S. commodity exchange CBOE. This will be the first time large institutional players will be able to expose their portfolio to cryptocurrencies in the traditional way: by buying them on traditional exchanges where liquidity is much higher than what we are used to in crypto. …

In my previous article, I touched on the problem of token holders, who consist of either actual users or investors. As shown, the activity of users determines the actual use of tokens and hence their utility value. But what about investors who act as passive holders? Do they increase or decrease network value?

The answer is not straightforward, and we need to understand how the relationship between users and investors can change. When there is an ICO, token holders act as investors, although a large part of them may become future users once the product is built. Initially, however, people buy tokens because they believe a project has a good chance of success and value appreciation. Once the product is built and has some users, we can determine token value with more certainty by analyzing fundamentals, such as the exchange of tokens by users to acquire a particular utility.

When the crypto community is blinded with ICO hype, there are few attempts to determine the best methods for evaluating cryptocurrencies and finding those with a utility value. I believe many more attempts will be made when the industry matures, but I am still shocked how little has been written about this topic compared to the $150bn plus market capitalization. On the other hand, the current environment doesn’t really incentivize such attempts, and therefore it is probably better to spend time for an ICO instead.

One insightful concept of token valuation is Chris Burniske’s Crypto J-Curve. The model splits token value into current utility value and discounted expected utility value. My question is how much of the value can really be attributed to the current environment, where many market participants don’t really care about or understand the specifics of a token’s utility as long as there is a common perception of successful fundraising and exchange listing. Sometimes I think a successfully funded ICO is like the concept of money: if you believe it works, I do too. But the “issue” is that you think the same way I do and we both invest under the assumption of a common belief, not because we understand the utility of the token. It’s a bit of a bold statement and probably too much of a generalization, but it holds true for a large number of projects out there. …


Primoz Kordez

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