The time to capture value
CRUCIBLE Insights — Paper #1
Some will inevitably believe that the CRUCIBLE community is crazy to be entering the Digital Assets space at this point in time. This paper is published to share our view of the market and why we think that this is the most opportune time for us to capture real value.
It is important to note that nothing in this paper should be construed as investment advice. You should not take any investment decisions based on this paper.
How do we understand the market?
Since 2008, the blockchain and cryptocurrency market has experienced booms and busts of epic proportion. The booms were driven by innovations that were hyped up by media, speculators, Ponzi schemes and outright scams. Booms driven by non-intrinsic value linked investments inevitably lead to bubbles, and as we all know bubbles will eventually burst.
We assume that, readers of this paper understand the true potential of blockchain as a technology and its countless applications. We are not making the case for blockchain as a technology in this paper.
Published in 1995, The Gartner Hype Cycle for Emerging Technologies provides a very lucid framework for understanding what is happening to blockchain technology and where it is heading.
Therefore, our understanding of the market is based on our mapping of blockchain technology using the Gartner Hype Cycle for Emerging Technologies curve.
Where are we on the curve?
In order to formulate an investment thesis for the CRUCIBLE community, it is critical to have a clear understanding of blockchain technology within the context of the Gartner Hype Cycle for Emerging Technologies.
Innovation Trigger: The innovation was triggered on the 30th of July 2015 when the Ethereum network went live unleashing the potential of public smart contracts.
Peak of Inflated Expectations: The exact point where “inflated expectations” peaked is difficult to pin down but we hypothesize that this must be highly co-related to the NFT market bust (as the embodiment of inflated expectations). As such, the peak of inflated expectations may have been reached between December 2021 and March 2022.
Trough of Disillusionment: It is fairly easy to agree that blockchain technology is on the downward slope heading towards the “Trough of Disillusionment”. However, when we will reach the actual trough is a conclusion that can only be made in retrospect.
Conclusion, blockchain technology may have passed the “Peak of Inflated Expectations” and is on the downward slope heading towards the “Trough of Disillusionment”.
So why are we starting to invest today?
By now the argument should start to become more apparent. The CRUCIBLE community wants to be deeply invested in blockchain technology and be part of shaping and defining the “Slope of Enlightenment”.
The best time to start investing is shortly before or right after the Trough of Disillusionment is reached. However, as we know, no one is ever able to perfectly time the market. On top of this, it requires significant amount of time to get organized, complete due diligences, and start deploying capital. It is thus imperative that the build-up commences today.
Conclusion, for CRUCIBLE to define and shape the “Slope of Enlightenment”, and deliver value and returns, it is critical to kickoff our efforts as a community today.
What is our main investment hypothesis?
During periods of market hype it becomes impossible to differentiate between projects that have true fundamental value and those that are another fickle scheme. As we have seen during periods of hype — all digital assets seem to rise and fall in a synchronous pattern.
Currently, however, there are still some projects/assets that are not taking the hard beating of the overall digital assets market. It is our view that today, market forces are naturally separating the real from the fake or fraud. We will be on the look out for use-cases that will perform better than the overall digital assets market.
Our hypothesis is that blockchain use-cases that truly solve real world problems, provide clear utility to their ecosystems, and have sound fundamentals will be filtered out naturally by market forces.
How will CRUCIBLE invest?
Based on a due diligence process to be developed by the CRUCIBLE community, CRUCIBLE will invest in:
- Projects and/or assets that are already on the market, or
- Support and invest into individuals and/or teams that are building or interested in building blockchain applications that solve real world problems.
What will CRUCIBLE not invest in?
As a matter of principle, below is a non exhaustive list of what CRUCIBLE will not invest in:
- Cryptocurrency tokens, defined as tokens whose sole purpose is to act as money (For example, Doge Coin or Bitcoin).
- DeFi tokens that are used as rewards for staking and/ or farming operations (For example, PancakeSwap tokens).
- Tokens of centralized exchanges (For example, BNB or CRO)
- NFTs that are PFPs, art, community, etc.
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