FOMO, ETH vs MATIC, Finance NFT’s & This Weeks Trending Coins
In This Issue
- For this weeks portfolio tip, I’ll be talking about FOMO.
- David compares Ethereum and Polygon.
- Sam has a report for you on Finance NFTs.
- Rebecca has this week’s top trending coins.
Premium Subscription highlights this week:
- Portfolio Moves: The market is moving right now and each week in my portfolio section I update my buy and sell orders.
- Jesse’s Altcoin Report: This week Jesse has a report on Railgun, which is solving the privacy issues associated with transacting on open public networks like Ethereum as we move closer to Web3.
- NFT mints: 3 upcoming NFT mints to keep an eye on as the market heats up.
Lark’s Portfolio Tips
The Fear Of Missing Out
FOMO is a real concern when markets start moving up again. The ballet of emotions never ends in crypto. Terror and panic on the way down. Depression and despair at the bottom. Anxiety and FOMO on the way up. Greed and euphoria at the top.
January was a FOMO month.
So, you didn’t perfectly buy the bottom? Guess what… almost no one did!
Here are a few things to remember about FOMO in crypto
First: The market has near endless opportunities. If you are stuck like a dog chasing cars as they go by then you are pretty quickly going to get run over. You will be little more than meat for the grinder. Exit liquidity for those who saw the opportunity before you. Wait for the new opportunities to show up. Get in before the hype or get in just as the hype is starting. BUT, you have to have your ear to the ground for this work. By the time the media is talking about how X narrative is the new paradigm of money, it is too late.
Second: Remember that much of what happens in crypto is seasonal. The narratives tend to cycle from one to the next. For example, in 2021 we saw narratives hype around Bitcoin Season, Ethereum Season, Solana Season, Gaming Season, Dog Coin Season, Polkadot Season, NFT Season, Metaverse Season, Bitcoin Season Again, Everything Season, and then NFT Season Again. Most of these narratives and sectors will pump again. So instead of buying high on the current narrative like AI coins or Liquid Staking Coins, look for what could be coming around the corner! Like new layer one coins or a new DeFi season as tokenomics upgrades come or even the next gaming season.
Third: Think from a perspective of capital preservation. I know we all want to expand our capital which is why we ape into crypto like bananas are going out of season. But when you are feeling a strong sense of FOMO sit back and take a few minutes to think. Ask yourself what is the risk to my capital if I buy now? I know we all want to think about how insanely rich we will get by clicking on the buy button, but not factoring in downside risk and badly timed entries can get you in trouble real quick.
Fourth: Weigh up the risk-reward of entering now. You don’t want to be totally sidelined in cash, but you also don’t want to be entering at bad times. This is what causes a lot of pain for investors in markets. Fomoing on pumps. If a coin is currently being talked about as the new paradigm of money and just went up hundreds of percent then caution is warranted. Can it keep pumping? Sure. But in many cases by this point you missed the meat of the move and entering now is a higher risk versus waiting for a big pullback.
For what it is worth I think we are facing the potential for a good rally in 2023, but risk does remain. If 2019 is any kind of indicator then you should be prepared to see something as crazy as a further 100% price rally followed by a 50% drop. Basically a round trip. Those FOMO buys won’t seem so awesome if such a scenario were to play out.
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Ethereum vs Polygon by David
Ethereum vs Polygon: Two powerhouse blockchains in their own right.
Ethereum is staking its claim as the powerhouse Web3 blockchain for the 21st century digital economy. The network enjoys a 20% crypto-market dominance with a $192 billion market-cap. Meanwhile, Polygon is the most dominate layer-two (L2) blockchain for Ethereum. The network is ranked #10 by market-cap and is facilitating some serious economic activity.
This article compares these two networks. Specifically:
- What are they, and how do they interact together;
- How do they compare in terms of performance, product statistics, and emerging technologies;
- Tokenomics; and,
- What are the high level positives and criticisms of both.
Let’s get started.
Ethereum is a decentralized, proof of stake (POS), programmable, layer one (L1) blockchain protocol. Conceptualize Ethereum as a global computer network where users build and deploy applications (dApps) within it. These dApps form an ever-expanding digital marketplace that connect users together for commerce and other activities.
Polygon is also a decentralized, POS, programmable blockchain protocol. However, Polygon is a L2 network built “on top” of Ethereum for the purpose of improving Ethereum’s scalability and efficiency. Polygon achieves lower gas fees and increased transactions per second (TPS) for Ethereum by processing transactions on the Polygon chain, and then using roll-up technology to batch over synthesized transaction data to the Ethereum chain for ultimate finality.
Let’s keep it simple. Ethereum is a ground-level super-highway. All the action ultimately starts and stops here. Polygon is a smaller highway built above and running with Ethereum, all for the purpose increasing the super-highway’s scalability and efficiency.
Ethereum & Polygon Technical Specifications
- Proof of Stake: Both blockchains use networks of decentralized, permissionless validators for security. Ethereum has about 509,000 validators. One must deposit 32 ETH (about $50,000) in order to run a dedicated staking node on Ethereum’s “Beacon Chain”. Polygon’s uses 100 validators. Anyone can be validator, but they must stake enough MATIC into special management contracts in order to break into the top 100 to assume validation duties.
Source: https://beaconscan.com/statistics
- Programmable (aka Smart Contracts): Anyone can build and launch dApps on either network. The engine behind these dApps are smart contracts. Smart contracts are computer programs that automatically execute actions whenever certain stimuli are triggered. Ethereum broke ground with the development of smart contracts, and Polygon, as well as many other L1s and L2s, adopted the technology. DeFi, NFTs, gaming, and other Web3 applications owe their existence to smart contracts.
Performance
Regarding performance metrics, Ethereum shines with concerns to decentralization (security), market capitalization, and the number of offered dApps. This makes sense given Ethereum is one of the older and most innovative blockchains in the crypto space. Regarding decentralization, the number of ETH validators continues to increase. And given the network has famously never experienced a major shutdown or security issue, it’s becoming increasingly clear that Ethereum can be relied upon.
Polygon shines with regards to transfer fees and TPS. Again, this makes sense given Polygon’s main purpose is to increase Ethereum’s efficiency and scalability. Doing business in Polygon is dirt cheap!
Decentralized Finance
Ethereum is the king of DeFi. The network hosts approximately 645 dApps with $28 billion in total value locked (TVL). Polygon trades with Arbitrum as the fourth largest DeFi blockchain. Currently, Polygon hosts 359 dApps with $1.2 billion in TVL.
Source: https://defillama.com
NFTs
Ethereum is also the king of NFTs. The network is ranked #1 in all-time NFT sales volume by blockchain with $35 billion in sales. Polygon ranks #5 with $600 million in sales.
Keep an eye on Polygon’s NFT ecosystem. The network landed huge NFT partnerships in 2022. Reddit, Adidas, Adobe, Disney, Instagram, and several other heavy-hitters all decided to build out their NFT marketplaces on Polygon. The Reddit partnership alone increased Polygon’s NFT trading by 770% in Q4 2022. This occured when Reddit Digital Collectibles launched, where users initially minted 5 million NFTs, generating roughly $10 million in revenue.
Source: https://www.cryptoslam.io
Emerging Technologies
Both Ethereum and Polygon are unveiling potentially revolutionary technologies to the blockchain marketplace.
Ethereum is making strikes in terms of decentralized social networks, identity, and science.
- Decentralized social networks are blockchain-based social network platforms that protect user privacy and data by distributing information across network nodes. These networks are immune to censorship, control, or incompetence by one centralized authority. Peepeth, Mirror, and MINDS are all Ethereum-based social networks that are live now.
- Decentralized identity is a framework that flips the current, traditional identity system on its head. Our current model requires users to hand over private data to centralized entities for access to products or services. A decentralized identity framework consists of only users having access and control to their personal identifying information (PII) on the blockchain. Users can submit cryptographic proofs of their PII to service providers in order to gain access to services. Thus, users preserve their anonymity and providers can verify that their users are who they say they are. Working projects include SpruceID, Proof of Humanity, and BrightID.
- Decentralized science is a movement that leverages the blockchain to change how scientific research is funded and shared. Blockchain-based funding models are coming online that allow scientists and science-based DAOs to use token launches for funding. Ways to put published research on-chain are being explored so that information is universally accessible to all.
Polygon is innovating in the areas of decentralized identity, blockchain building platforms, and roll-up technology.
- Polygon ID is Polygon’s blockchain-based decentralized identity management solution. The solution is conceptually the same per the description above. Polygon ID is live now.
Source: https://polygon.technology
- Polygon offers two blockchain building platforms that give third-party developers the ability to build customizable, EVM-compatible blockchains. Polygon Edge is a toolkit that allows for public or private, smart contract enabled blockchains. Polygon Supernets is an infrastructure system that helps third-party builders quickly achieve decentralization by tapping into Supernet’s professional validator partners. These third-party Polygon chains essentially function like L3s. They connect with both the Polygon and Ethereum chains.
- Polygon is pushing the boundaries of roll-up technology. A zkEVM rollup solution is in a public testnet phase now. Under development is Polygon Miden (STARK-based zk-rollups) and Polygon Zero (recursive proof, ETH-friendly rollup solution).
ETH
- Total supply of approximately 122M tokens, all of which have been issued and released.
- Approximately 16 million ETH (13.28% of total supply) are locked into staking contracts. These tokens are inaccessible until the network’s Shanghai upgrade, scheduled for March 2023.
- ETH’s total supply continually expands and contracts depending on network activity. Due to EIP-1559, a burn-mint mechanism burns ETH during periods of higher network activity (thereby decreasing the total supply) and mints new ETH when network activity is low (thereby increasing the total supply).
- The 2015 initial distribution of ETH allocated 83% of tokens to a public crowdsale, while 17% went to the Ethereum Foundation and early contributors. Approximately 50 million new ETH have since been minted and released to miners in the form of block rewards.
Source: https://messari.io
MATIC
- Max supply of 10B tokens, all of which have technically been issued. 8.7B are currently in circulation, while the remaining 1.3B will be unlocked over the next few years via staking rewards.
- 36.2% of MATIC tokens are currently locked up in staking contracts.
- Initial coin distribution occurred in 2019 with 41.9% going to the Polygon team, advisors, and Polygon Foundation.
- Currently, the share of tokens held by Polygon’s centralized entities has increased to approximately 42.5% of total supply.
Source: https://messari.io
<h3 id="ethereum-vs-polygon:-concluding-thoughts,-pros-&-cons“>Ethereum vs Polygon: Concluding Thoughts, Pros & ConsEthereum and Polygon are both highly-regarded blockchains, but each serve different purposes in the larger blockchain economy. Ethereum is an absolute heavy-weight, responsible for approximately 20% of all economic activity in the blockchain economy. Polygon is an L2 primarily purposed to support Ethereum.
A comparison of both blockchains reveals the following high-level positives and criticisms of each:
Perhaps the most savvy way to approach these two blockchains is knowing how to best utilize both. For example, with concerns to activities where security is paramount, conducting business on Ethereum is likely the safest route. However, for those making high volume transfers and trades, utilizing Polygon will reap some serious transfer fee savings.
I recommend using both networks and keeping top of mind how you can take advantage of their respective strengths. And given the levels of economic activity and innovation happening on both, I do believe we will continue to see growth and ground-breaking contributions on Ethereum and Polygon for the foreseeable future.
NFT Finance by Sam
One problem with NFTs is that they’re illiquid and–when it comes to well-established collections–can be expensive to buy into. At the same time though, there’s a lot of price volatility, which equals endless opportunities to profit.
Tapping into this situation is the emerging world of NFT Finance, or NFTFi, which basically means protocols and platforms that allow users to trade around and utilize NFTs in more flexible ways than just flipping for profit (although there’s nothing wrong with flipping for profit too).
Let’s look at some key NFT Finance products, what they have to offer, and how they might alter the NFT and DeFi landscape.
<h3 id="nftperp“>NFTperp
Image credit: NFTperp
Operating on Arbitrum, NFTperp is a perpetual futures DEX based around NFTs. What that means is you can take long or short positions on NFT collections, without actually buying and selling the NFTs themselves. This way, you can profit from price movements on blue-chip NFTs (BAYC, MAYC, CryptoPunks, Azuki and Milady Maker are currently supported) without needing a huge stack of ETH to get started.
If you’re good at predicting price changes, then this is the platform for you, particularly as it allows you to trade with leverage (but be careful, leverage increases your risk), and because you can bet on prices going down.
Very usefully, NFTperp has a paper trading option, so you can try it out in simulation mode first before moving on to the real thing, which is actually still in beta mode.
<h3 id="jpeg’d“>JPEG’d
Image credit: JPEG’d
If you’re looking to unlock NFT liquidity and also earn passive income, then there’s JPEG’d. It’s a DeFi-style peer-to-protocol system whereby you deposit NFTs as collateral against which to mint and borrow PUSd (the platform’s stablecoin) or pETH (the platform’s synthetic Ethereum derivative).
You can swap PUSd in the app for ETH, DAI, USDC or USDT, or there are mechanisms which use pETH to generate yield.
Image credit: JPEG’d
By providing liquidity in the pETH/ETH Curve pool, you can earn rewards in CRV, the Curve utility token, and you can stake to the JPEG’d Auto-compounder, which will make use of Curve and Convex to earn and compound CRV and CVX rewards (CVX is the native token of the Convex system).
And by using the Auto-compounder, you’ll get receipt tokens which can be used in a JPEG’d vault called The Citadel to earn $JPEG, which is the protocol’s governance token. Although this sounds a little complex, the process is all laid out clearly within the app.
If you use JPEG’d, always beware of liquidations, which occur if the debt/collateral ratio becomes too high (the critical level here is 36% or above). If this happens, then your NFT will be lost to an auction process.
As for the protocol’s governance token, if you just want to hold exposure to what looks like a solid platform in an expanding new corner of crypto, then you can trade $JPEG on Sushiswap. There is also a bond program within JPEG’d, whereby the $JPEG token can be acquired by depositing CVX tokens.
The JPEG’d platform has integrated eleven top-tier NFT collections and has plans to add more, and while valuations take floor prices as their guide (utilizing the Chainlink oracle), there is a Traits Boost system that takes into account rarity, although this currently only operates with CryptoPunks and BAYC.
<h3 id="renft“>reNFT
Image credit: reNFT
As NFTs evolve to possess utility–perhaps in gaming and metaverse worlds, or as real-life access passes–there’ll increasingly be people who want to get hold of particular tokens for a limited period of time, and that opens the door to NFT renting.
One protocol developing this utility is called reNFT, which has built a rental marketplace where NFTs can be lent and borrowed for a flexible term, at a daily rate. NFT rentals are a developing area, and reNFT emphasizes that its protocol can be easily integrated, meaning, for example, that it could be slotted into a gaming project to allow players to access or lend in-game assets.
Also, reNFT allows NFTs to be rented out while they are being utilized in other protocols, meaning there could be the possibility of unlocking liquidity against an NFT in one protocol, while simultaneously renting it out in reNFT.
<h3 id="nftfi“>NFTfi
Image credit: NFTfi
If you want uncomplicated, peer-to-peer lending, then NFTfi is the platform of note. Borrowers list NFTs, lenders make offers detailing their terms, and when an agreement is reached, the two parties are locked into an escrow smart contract. Keep in mind that if you’re putting up NFTs as collateral for loans, then failure to repay means the lender has the option to foreclose, and you could lose your precious JPEGs.
NFTfi now also has the option to list multiple NFTs together in loan bundles, saving on time and gas fees if you want to borrow against several assets at the same time.
As an alternative to NFTfi, there’s also the Arcade platform, which operates on a similar, peer-to-peer basis, and has been growing consistently in monthly loan volumes.
Overall, you can think of the NFT Finance world as being closely related to DeFi, but with NFTs as its base assets. Interestingly, a report from Electric Capital showed that in 2022, the first transaction by 80% of new crypto wallets was with NFTs, rather than with DeFi.
Image credit: Electric CapitalAs NFTs come across as simpler than DeFi and continue to attract greater levels of mainstream attention (taking in art, fashion and established brands), NFT Finance could become a more approachable, user-friendly version of DeFi, and may experience a rapid surge in interest if NFTs go on a future bullish run.
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Trending Coins This Week by Rebecca
Here are my key takeaways from the trends this week and the bear market isn’t slowing down development or altcoins making new all-time highs.
1 – Aptos is a Layer-1 blockchain created by ex-Meta employees that’s hit a new all-time high with its price rising by over 130% in the past week.
2 – Edgecoin is the native token of Edgecoin Bank, an all-in-one protocol for managing digital and fiat currencies. This week they launched a cashback reward debit card that gives 6% rewards in its token, Gradecoin.
3 – My Neighbor Alice is a play-to-earn (P2E) game on the Chromia blockchain that’s been featured heavily at this week’s Pocket Games Connect Conference in London.
4 – Gala is a play-to-earn (P2E) gaming ecosystem that’s launched its 2023 strategy, which will see new music and movie platforms launched, as well as updated tokenonmics.
5 – Gains Network is a decentralized trading platform on Polygon and Arbitrum that’s been running a trading competition with a prize pool worth $100,000. It’s also announced a new GNS stake pool in collaboration with DeFi platform, Giddy.
6 – CANTO is a new community-driven L1 blockchain that’s seen its on-chain volume increase by 186% over the past week. There’s speculation this price action could have come from a volume spike in Canto’s quasi-stablecoin Note.
7 – Magic is the native token of Treasure, a decentralized gaming ecosystem. It has released a new game builders’ program, supported by Arbitrum, to encourage games to the platform.
8 – SingularityNET is a decentralized AI marketplace that’s announced a strategic partnership with COTI, who are developers of DJED, the new stablecoin on Cardano.
9 – Flux is a decentralized network providing Web3 infrastructure in the cloud that’s announced support for NOSTR, the messaging protocol on its infrastructure.
10 – Optimism is an Ethereum L2 scaling solution that’s announced it will be added to crypto intelligence platform, Arkham.
11 – Vela is a DEX on Arbitrum that’s seen its DXP token surge 50% in 24 hours ahead of its beta release at the beginning of February.
12 – GMX is a DeFi perpetual exchange that’s been mentioned in Forbes online as a top crypto for 2023. GMX has also dropped hints of partnering with permissionless liquidity market, Sentiment.
13 – Polygon is an Ethereum sidechain that’s seen the launch of a partnership with Fractal, to bring further enhancements to its Web3 gaming roster.
14 – Fantom is an L1 DeFi blockchain that’s going to be integrated with the cross-chain liquidity provider, Entangle protocol. The testnet for this will be launching on 30 January. Fantom also plans to introduce V2 of its fUSD stablecoin
15 – Fetch.ai is a blockchain-based AI platform that’s still riding the wave of the AI hype currently in the market. The leadership team is teasing a major release for the platform in March 2023.
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Final Notes
There’s BIG NEWS in the Ethereum space that could have a major effect on it’s price! Click on the video below to find out more 👇
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
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Lark and the Wealth Mastery Team
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TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
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