Sound Money and White Noise
The market is a rollercoaster, and so far it has proven to be a wild one. Those looking to ride it, however, are meeting the thousands already cramming into the carts and about as many trying to sell you their tickets.
Any introduction to cryptocurrency written in 2021 will no doubt reference the enormous growth the market has experienced in such a short time. Since the start of the year, the total cryptocurrency market cap has grown by more than 210%, adding around $1.5 trillion in just four months. This explosion in value can be attributed to the growing number of market participants made up of increasingly large market actors, who in turn further validate the space and attract even more users to crypto. In January alone, crypto adoption grew by more than 15%. New participants, new money, new gains, and new losses — we’re on for the ride, and it’s showing no signs of stopping.
Greed, FOMO, and the proliferation of crypto
If you’re invested in any kind of crypto asset, you’ve probably heard the whisper in your ear that brought many of us to the amusement park in the first place. “You should have bought Bitcoin in 2012,” it says. “Don’t miss this opportunity again.”
This sentiment drives the market forward, and new participants feel it acutely. Bitcoin, Ethereum, and many other ships might have already set sail, but a plethora of low-cap coins are out there, any one of which might be the golden goose that gives the kind of returns that we dream about. “This is your chance,” this whisper says. “Choose right and your life changes forever.”
But which coin has that power?
One of the problems that market participants face, both new and experienced, is the huge number of new projects in the crypto space. It’s difficult to gauge exactly how many have launched this year, but our intuition gives us a rough estimate: lots. Fortunately, crypto is also driven by data and we can test our intuitions against something more empirical. To get a better understanding of what has been hitting the market we conducted a survey of new projects listed on CoinGecko in the 30 days leading up to April 24, 2021. In this period alone, 396 projects were listed: about 5% of all listings on the website. This was an average of 13 projects per day, or roughly one new project every 109 minutes.
Of those listed, 23% involved NFTs in some way and around 30% had some mention of DeFi in their services. These figures are somewhat unsurprising, considering the current narratives permeating the crypto landscape. The DeFi sector was mainly split between AMM, CEX, DEX, and swap tokens (17%) and yield farms (11%). Other significant categories included governance tokens (8%), derivative and synthetic products (7%), and launchpads (6%).
This survey has its limitations, of course. Not every project launched will list with CoinGecko, and a manual categorization is prone to human error. But even with these points considered, the data is clear — there is an overwhelming number of projects launching now, with most clustering around sectors that have received the most public attention.
It makes sense that the areas that have been in the spotlight would be receiving the most money from investors and experiencing the most growth in terms of new developments. Unfortunately, however, crypto projects are susceptible to some unique problems. The open-source nature of many smart contracts makes it incredibly simple for someone to copy and paste some code, change a few names and then redeploy, often without any intentions to maintain and update the project into the future.
Several projects also seem to be tacking on components that allow them to fit into one popular narrative or another. For example, as NFTs are currently trending, some projects are looking to retrofit NFT functionality into something which otherwise has nothing to do with NFTs at all. These attempts are often poorly executed and obfuscate the fundamental narrative of the project.
Another metric we can use to measure growth is the number of verified smart contracts on Ethereum and Binance Smart Chain (BSC), the two most active ecosystems at the time of writing. Before we begin though, it’s important to remember that one verified smart contract does not mean one unique project: in theory, anyone can deploy a contract for any reason, and projects will often have multiple contracts running for various functions. Nevertheless, the increase in the number of these contracts can indicate how much the network has grown in general. On Ethereum, for example, around 17,000 verified smart contracts have been deployed since the start of the year — a figure about 230% greater than the same period last year.
The rapid growth of BSC tells a similar story. In the 30 days leading up to April 24, 2021, around 31,000 verified smart contracts were deployed. This figure accounts for more than 50% of all smart contracts ever launched on BSC. While many of these contracts on Ethereum and BSC are part of legitimate services, there is also a significant number that has malicious purposes.
A common scam that is extremely difficult to combat involves creating a token that is identical to that of a popular project and then deploying it on decentralized exchanges. Someone looking to trade the legitimate token might accidentally select the fake pair instead, send their money to the contract, and receive in return a wallet full of worthless tokens. These scams are incredibly easy to launch, require almost no effort to maintain, and have proven to be lucrative: one such scam last year reportedly netted over $53,000 in just 30 minutes. Experienced traders know the simple way to avoid falling victim to this trap: always double-check the contract address, and take it from a reputable source in the first place. But for new participants who might have never traded on a DEX before, these scams remain all too successful.
OMNI & HIVE: Benchmarks for quality
Among the fake contracts, scams, and plain dud projects, how are inexperienced market participants meant to tell the diamonds from the zirconia?
Xpressify offers two solutions to these pressing issues. First, our OMNI research tool allows users to access researched reports on projects and to commission research into new tokens or coins that interest them. The enormous volume of projects entering the space will no longer be a problem — by utilizing Hive Intelligence to gather and interpret data, Xpressify users will have access to information that will continue to stay relevant. OMNI will also feature educational pathways and resources designed to bring even complete crypto novices up to speed with the latest trends and risks. For example, after an introductory course on decentralized exchanges, an Xpressify user will be equipped with the knowledge necessary to spot fake contracts and, as a result, trade safely in these ecosystems.
Second, the HIVE launchpad will give quality, vetted projects the opportunity to launch with the backing of eager, informed investors. Every project that enters the HIVE launchpad will be subject to the same rigorous examinations that OMNI will be famous for, allowing potential investors to make informed decisions about which projects to back and ensuring that scam and otherwise bad projects are cut from the roster early. Projects that do make it to launch on HIVE will be offered a range of incubation services, allowing them to go to market with the best possible product. HIVE will service users as well, acting as a jobs board that connects upcoming projects with the industry professionals that they need.
The first quarter of 2021 has been incredible in terms of growth, and we believe that this is just the beginning. But this rapid growth also means an increase in the number of people trying to sell tickets to dodgy rides — Xpressify will be the ultimate tool for new and experienced investors alike to navigate this rapidly expanding ecosystem, ensuring that we can all prosper well into the future.
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