The Week To Be In Crypto [02/25/2019]
Market Overview
Down on the week but the real action was over the weekend. Bitcoin jumped above $4k for a little bit but then pretty aggressively moved back down. There are screams of “manipulation” but that doesn’t really encapsulate the full story. Humans in general collect around narratives and it seems like in crypto the big market makers do the same. They push and interact with those narratives using automated trading (algos) and large amounts of capital. When the capital being deployed is large compared to the available liquidity you end up with large fluctuations. This isn’t crypto specific, does anyone remember the DOW losing 1,000 points multiple times last year? The traditional markets gap down because they are closed for a portion of the day, Bitcoin needs to get its dramatic moves in during an hourly candle.
There was a lot of enthusiasm when 4k was broken. Im not ready to say we wont see new lows but I am feeling pretty confident the real move to the upside will start at some point in 2019. If you agree now is the time to regularly accumulate.
A few high level cool updates:
- tippin.me lightning tipping plugin for twitter catching on (and #LNTorch made it to fidelity)
- Burner Wallet and xDAI very successful at ETHDenver over $30k in transactions for a total of about 20 cents in fees
- DAppBOI launches $BOI tokenizing his time as a designer
- and so much more……..
What I’m Buying
Going to take some time to talk about Uniswap a bit because it is really catching on. I have been following the project closely for a while now and it has had a couple mentions mainly in the recommended content. Some recent numbers.
- $3million in liquidity
- $1million peak daily volume
- More fees earned in one week than all 0x relayers earned All Time
High level it is a place to exchange ERC20 tokens and ETH. The main differences between it and other exchanges is that it isn’t a standard two sided marketplace (post your intent to buy or sell something, someone else fulfills that order). Anyone can provide liquidity for (virtually) any ERC20 by locking up equal portions of ETH and the Token (by value) in a smart contract. Anyone else can them come along and put ETH (buying token) or the Token (selling the token) into the smart contract to receive Token or ETH respectively. The pay a small fee for this and the price is dependent on the relation of the trade size to the pool size. The larger portion of the liquidity you are traying to trade the worse the price you will get due to slippage (you can dig into how it all works here https://docs.uniswap.io/) or check out the below article.
As the price moves due to trades market makers step in to arbitrage between uniswap and other exchanges to bring the prices in line. All of these trades pay a small fee to the pool and liquidity providers can extract their liquidity + fees earned at any point. Great information you say…
It’s add liquidity to uniswap season! Some resources
If you want to play around with how it all works I made a modeler in google sheets, just copy it and mess around.
Market direction still matters but they way I see it is if you have some of a token and some ETH adding liquidity to uniswap is not going to be THE WORST decision you make with it but it may be the best or at least pretty good. Over a long enough time frame with a lot of volume it could be very good.
If you want to get into more detail pintail has been doing some great deep dives on medium
The other interesting component here is that there is no token and no revenue model for the team building it. They have some funding but there were projects that raised millions in 2017 & 2018 that haven’t been able to gain anywhere near the same amount of traction. It does raise some interesting questions for how decentralized systems should be built and what success means for them.
http://weekly.tokeneconomy.co/2019/02/18/87-uniswap-and-no-freeriding
It takes a while to really “get it” with uniswap but once you do it really opens your eyes to what the future of open finance could be.
Recommended Media
Read
Listen
From the Slack
A collection of content from The Bitcoin Podcast slack group the past week
https://www.reddit.com/r/AskReddit/comments/atxdcb/what_free_software_is_so_good_you_cant_believe/
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