Portfolio Update — July Retrospective
In July we saw the market on a steady rise, with Bitcoin taking much of the claim, up more than 28% for the July period. The broader market was less friendly with only a few coins showing positive returns for the period. Our Portfolio overall remained flat, up 0.28% with the ‘Catch me if you can’ satellite holding the overall portfolio in the green.
MILLENNIUM FALCON
The Millennium Falcon was slightly down for the period with all coins bar Bitcoin and Bitcoin cash finishing in the red. Our heavy allocation to Bitcoin served us well but has left us questioning whether it is enough given the fact that it is likely that Bitcoin will be the first to be included as an allocation to Portfolios going forward. With ETF applications continuing and more institutional’s throwing their hats in the ring as custodial services, it is only a matter of time before one of these come to fruition and the first coin to benefit will most likely be the original.
Wanchain continues to perform poorly since introducing it into the portfolio. Our fundamental view of Wanchain has not changed and we continue to believe that their focus on interoperability will serve them well long term. However, it has brought into question the timing of our entry here, we did expect some volatility but in hindsight patience was the key.
Also after discussing EOS in our May update we have been watching eagerly. EOS have an enormous amount of capital to ensure they succeed and given the incredible community that they are pushing forward we see the platform solving some real fundamental issues for all future projects in the next 12 months. This will no doubt have a wave like effect ensuring more projects to utilise the platform.
With the lightning network continuing to push forward we have again considered Litecoin’s relevance and will be looking to move capital from it to projects like EOS with more potential.
CATCH ME IF YOU CAN
Our first satellite was the best performing proportion of our portfolio, up 15% for the period. Most of this can be attributed to Holochain which listed on binance. We also saw Zencash move up the market rankings after announcing mid month that it had successfully upgraded to a newer version which included ‘significant code improvements’and a new class of node — Super nodes’.
Quantstamp has had recent attention around accepting USD/ETH on its web based product. Although this sits separate to their protocol, the lack of confidence from a community perspective and continued growth in competition and open source alternatives has forced us to look for other opportunities.
RICKY BOBBY
The Ricky Bobby Satellite also remained quite flat overall for the July period with Ravencoin having the only movement upwards. As we expected this is starting to gain more traction as a truly decentralised project amongst the crypto community.
Sumokoin has performed poorly since we took a position, the low market cap privacy coin has significant amount of coins locked away, which makes the price inherently more volatile.
AUGUST OPENING BALANCES
- No update to portfolio weightings
- Sell: LTC
- Buy: EOS
- Increase positions in BTC & BCH
- Reduce position in ETH , DASH, XRP, NEO
- Sell: QSP
- Buy: AION
- Increase positions in ZEN
- Reduce positions in STRAT
- Sell: SUMO
- Buy: NEXO
- Reduce positions in ITC
ASSET COMMENTARY
EOS: EOS is a smart contract platform designed specifically for decentralised apps. Although this sound exactly how one would describe Ethereum, there are several large fundamental differences that makes EOS “bespoke” for Dapps and a future digital world.
EOS works via a consensus mechanism known as Delegated Proof of Stake, which simply is a voting mechanism where entities known as ‘Block Producers’ are voted in by the crowd to ‘produce blocks’. There is significant rewards for being a Block producer however, they are also under careful watch by the network. There are 121 total nodes and the top 21 are actively involved in block production. The other 100 are on standby in case one of the top 21 can no longer perform their block producing duties. They are elected based on whatever criteria you as a token holder find valuable. With ongoing voting should a block producer not perform their duty to the highest standard than they can be voted out by the network.
We have included EOS because we believe that it will be one of the surviving bottom layer protocols going forward. Although it gives up some decentralisation, it has a real focus on throughput and usability, which shows in the fact that it is one of the most active blockchains. EOS has a significant amount of capital on the sidelines that will be used to encourage innovation on the platform. EOS also has an incredible community that will ensure that EOS will continue to serve and create truly innovative products and services.
It is for all these reasons that it is hard to ignore EOS as part of your overall portfolio.
AION: The Aion network is a multi-tier blockchain network designed to support a future where many blockchains exist to solve unique industry problems and to power the services of the modern world.
Aion will become the common protocol used for these blockchains, enabling more efficient and decentralized systems to be built. The Aion protocol enables the development of a federated blockchain network, making it possible to seamlessly integrate dissimilar blockchain systems in a multi-tier hub-and-spoke model, similar to the internet.
Think of AION much similar to TCP/IP in terms of the internet. i.e we need all these blockchain communicating with each other in a common language if we are truly going have a decentralised future. This problem of interoperability is being solved by multiple bottom layer protocol in order for them to “win” the protocol war. The reason we like AION is it’s sole purpose is to build bridges between all blockchains and is run by an open source community. If AION become a leader in interoperability, if could see a significant marketshare of the entire space. They have a token model to back it up that requires staking and using of the AION token to reach consensus, build upon and payment to interact this interoperability feature. they are also looking at network pegging to AION tokens and creating new tokens backed by AION.
NEXO: The worlds first instant crypto backed loans platform built by parent company Credissimo, a leading fintech group from Europe that has been around for years.
Nexo’s platform is not so different in model to traditional margin lending platforms. You put your crypto up as collateral (BTC, ETH, BNB, NEXO) via your Nexo wallet and can be paid out in USDT instantly. USD and EUR are also available for loans although there is a bit of a wait on these due to high demand.
Nexo promised to bring a working product to market post ICO and achieved that goal from day 1. Since then they have hit every milestone on their roadmap ahead of schedule including increasing maximum loan amounts to $200'000USD. There is plenty coming up on the roadmap for the short term in the way of on-boarding more cryptos as collateral and a wider range of currencies to borrow. JPY is next in line which will open up fiat lending to the Japanese market.
For the long term they are currently looking to acquire a bank to free up liquidity for more crypto backed loans.
The Nexo token model is arguably one of the best out there. The first ever SEC compliant hybrid security/utility model. When held in the Nexo wallet the token pays out dividends of profits earned by the business (30%). On top of this if the token itself is used as collateral or used to pay back interest on loans taken against other crypto as collateral the fees are reduced by 50% making the interest rate on your crypto backed loan 8% which is a very competitive rate when compared to more traditional margin lending businesses.
