Free to Capitalize and Paid to Exchange

Considering @edicted thinks October is a pretty boring month in crypto, it seems to be ticking along rather nicely leading into the last two of the year. I know we aren't meant to expect anything, but here's hoping for a thriller end that smashes all upward records. Quite a few of my own coins have been "quietly" increasing their caps in what feels more like a coordinated tiptoe, not wanting to alert the parents to creeping out of the house and out to a raging party.

I am terrible at predicting the markets, but... I do it anyway.

I have to kind of, as I have various positions in far too many tokens that I don't use, so will look to offload at the highs. This will mean that I can take some profits from them and shift them into the things that I do use, or hope to use in the future.

Three of my largest holdings are all tied to Hive, with my HIVE, Splinterlands and CubFinance assets making up an uncomfortable chunk of the total. I don't think this is diversified (firstly, they are all crypto still), but at least there is some differentiation in usecase. Usecase is where it's at for the future and the projects that can't attract users and retain them, are going to struggle, especially since they are going to have to do more than be tokens to speculate on. This includes the liquidity pools, eventually.

There was an announcement in the Splinterlands press release channel saying that Splintershards (SPS) will be listed on two exchanges, Bitrue and MEXC - I don't know anything about either, but that is a good thing, especially since it already generates a lot of trade volume. The other announcement from Splinterlands was a technical one, which paves the way for more growth.

Additionally, a new bridge has been set up for the SPS token to allow players to transfer the token to and from their Ethereum wallet address. The contract address for the SPS token on Ethereum is 0x00813e3421e1367353bfe7615c7f7f133c89df74.

In the past and still largely today, the only reason projects have value is speculation on their price, regardless of what they actually do. Someone a couple days ago was telling me to buy "Shiba Inu", which is the 11th ranked coin by market capitalization. I don't know much about it, so I thought I would google,

What can Shiba Inu be used for?

This was the top hit.

15 Reasons Why You Should Invest in Shiba Inu Today

Support from Known Personalities
Impressive Market Capitalization
Listed in Major Crypto Exchanges
Powered by Ethereum
Provides more Security in Its Non-Custodial Exchange
There is a Lot of Hype
Token Price is too Low
Minimal to no Fees Required Buying SHIB
You Have Precedence
High Liquidity Ratio
Chinese Traders Buying in Bulk
Skilled and Experienced Developers behind the Project
Lower-Risk Investment Compare to Other Coins
Massive Community behind the Coin
Easy to Invest

lololol.

OMFG.

_{Read the article for a laugh.}

Do you see any reason on there to buy it? This doesn't mean it won't make you some money (or lose you a lot of money), but long term, what is the point? Yeah, you might be able to buy something with it as it could get accepted, but that is not a reason to actually buy it, as you can buy shit with lots of tokens. But, all of these tokens rely on one thing for value - exchanges. If no one can trade a token, it doesn't matter how many dog pictures Elon Musk Tweets out, it is worthless. As such, exchange listings are vital for the success of a project.

Are they?

Well, there are other ways to get incoming revenue these days, aren't there? For example, what is very interesting about Splinterlands and similar projects, is that they have been able to generate value without the normal exchange listings and instead, have relied predominantly on their self-created, second-layer exchange that rides on Hive. A lot of the early investment has come from Hive (Steem) through that gateway, but now it is opening up ever further and, still not needing a listing on an exchange. What this means is, the success of the project doesn't rely on getting listed for speculators, as it is more self-sufficient.

This has two distinct advantages in regards to exchanges. One is that they are not vital (as proven) to the success of the project and due to this, they are not reliant on getting that listing, but the exchanges need listings. This means that the successful projects will have to be courted by the exchanges, so exchanges may even eventually end up paying the project to list it.

This might be some time off of course, as the speculation on price is a money-spinner for the exchanges, but long term, it will be the projects with use case that will be attracting the lion share of the value and the exchanges will want a piece. At the very least, popular projects that are actually being used are likely to benefit from free listings, but I suspect that they will attract successful projects by offering them points on the package, much like the AMM do for liquidity providers. This will mean for example, SPS stakeholders could get additional ROI from trade on exchanges. This sets up an additional tension between holding and selling, creating some scarcity on the market when staking is more lucrative than selling, and liquidity on the market as the tables turn on price increase. Would be interesting.

However, what is more interesting is that while nearly all projects are only holding any value because they are exchange traded and living off some kind of misplaced hype, the usecase projects are building like businesses before they go public on the exchanges. They are founded, they start creating a product, attract investors and users, expand their offerings, add additional services, refine, increase userbase, find ways to reward participation, improve experience, organize structure, hire new talent...

It is only after all of this that the company is ready to open up to the full market, and prior and during this, it is all early bird VC money coming in, people willing to put some capital to risk that in time, there will be a viable product. In time, if projects do not build in this way, they will no0t have the foundation of structure on the tech or users to maintain them, meaning they will be flash in the pan and behave very much like the dotcom companies that were evaluated on market hype, but were all smoke and mirrors, with no substance.

The exchanges themselves are going to struggle in various ways in the future, especially as the DEXes start to become more turnkey model in the same way that many of the DeFi projects are just cut and paste with a new skin and some numerical tweaks of other projects. This means, exchange listings aren't valuable unless the exchange itself is being used and has volume. Currently, there are a handful of large ones, but in the future, that is going to expand even further, which means they will have to increasingly compete to attract their own customers.

What are they going to compete on - a race to the bottom fee reduction? Unlikely. More likely, is that they will compete on their ability to attract attractive listings and that means, the projects with usecase and trade volume potential, will have market bargaining power, in the same way that a large corporation can get governmental deals to move head and large regional offices into countries.

In the past, the reason that projects were so reliant on exchanges was in order to reach incoming revenue, they had to, since they were isolated and stuck in their project. Even on Ethereum, moving from one ERC20 token to another is ridiculously expensive, so many users trapped for the time being, unwilling to pay the fees. But, projects are able to increasingly connect across blockchains using technological solutions for relatively low fees and, gain access to more potential capital investment. With hundreds of billions of dollars spread through the hundreds of liquidity pools, finding capital is no longer a problem, especially in a bull market. And, when the time for a bear market arrives, that same capital is going to look for places it can earn or be used.

In the next bear market, what is holding up the price of Shiba Inu? Will the "Chinese traders" still buy in bulk? Is it a community of holders?

I think not.

At some point, unless they do something that adds an incredible amount of use case, the engineered value that is built on stacking hype and a massive supply is going to crash very, very hard.

Memes come and go.

Brands however, they can endure, as long as they are able to keep offering people a reason to buy, use and hold their product. If the only product on offer is a token, then that is not going to survive the user marketplace and no matter how tight some will hold, interest will be lost and the value will bleed out as "holders" realize they want to be users.

There is going to be a lot of volatility and gains to be made and loss, but as time marches on, the capital is increasingly going to pool in less volatile places, where it is no longer considered currency, but assets.

But just remember what I said in the first paragraph - I am terrible at predicting the markets.

So, Do Your Own Research.

Taraz [ Gen1: Hive ]

Posted Using LeoFinance ^Beta