The Crypto Insider Report #2: Sushi Pool & The First 24hrs of $STANDARD
Disclaimer: Everything we write in "The Crypto Insider" newsletter is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
Most of you have learned about the pool on SushiSwap where you can trade $STANDARD, but to be sure that the story data are very clear to everyone (who reads the newsletter), here we go.
Since Sushi is a DEX, the liquidity is not provided by those who initiate the project, but the pool is created by those who deposit STANDARD and USDC to receive an LP token (ERC-20) in return. With that LP, you can get rewards in STANDARD - https://app.stakeborgdao.com/yield-farming/slp. The reward varies depending on how many other people use this LP, but as you can see, it's generous enough to stimulate increased liquidity.
Why is liquidity important?
First of all, for the price stability. You can see that 1 $STANDARD increased from about $5 to almost $16 (at the time of writing), although there were only 200 transactions and a volume of $550,000. That's because the liquidity pool was small at first and grew as people realized they could get substantial rewards in $STANDARD.
Speaking of volatility, my teammates published an article about tokenomics in the "Community Compass" section, focusing on the number of tokens that will enter the market in the next 12 weeks. You can see that, currently, there are 117,400 STANDARD tokens in the market, 48,000 of which have been vested for the treasury. Therefore, there are 69,400 available. This number will increase to 154,800 with epoch 2, to 255,200 with epoch 3, and so on.
I have said this, and I will repeat it: there will be significant price swings in the first 2-3 weeks. The liquidity is low, and the demand is there. The important thing is NOT TO FOMO. Does this mean that the price will reach $5 or $8? Honestly, I don't know, but what I do know is that in a market where the 24-hour volume is more than half the pool value, the price can easily go in any direction. You saw the ENS domains... although the tokens received were free, the demand pushed the price very high. There are differences in caliber between the Stakeborg DAO and what Nick Johnson built at ENS (DAO), but what I wanted to point out is that no one knows exactly where a market will go in the early stages.
We, as bootstrappers, have a duty to focus on the things that lie in our power: to do our job well and take this DAO where we planned when we decided it would be the spearhead of the Stakeborg initiatives. The price on November 10th, 2021, is irrelevant to the time scale. Sure, it can be important when buying $STANDARD, but all projects, regardless of their size, have major increases and decreases over their lifetime; what makes the difference, in the long run, is the level of trust you maintain in those who execute the mission.
Stay safe,
V
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The first steps in crypto:
Blockchain Scalability and Solutions to Increase It
To understand Layer-1 solutions, we must first take a look at blockchain scalability. Despite providing users with a variety of benefits, such as decentralization, high levels of security, and recordkeeping that cannot be changed, blockchain technology still comes with a few drawbacks.
As its usage becomes more common, various issues are surfacing. One of them is scalability, which refers to the system’s throughput rate measured by how many transactions are performed per second (TPS).
However, the more general definition of this term may vary from one expert to another, and it may sometimes be used to refer to the system’s ability to provide every user with a rich experience, no matter how many users it has at any given time.
Considering the increasing usage of cryptocurrencies in everyday life, the need for blockchain layers has also grown. Such layers are necessary for ensuring higher network security and speed, better recordkeeping, higher TPS, and so on. Here is where Layer 1 and Layer 2 solutions come into play.
What Are Layer-1 Solutions and How Do They Work?
When talking about a decentralized system, a Layer-1 network refers to a blockchain. The purpose of Layer-1 solutions is to improve the base protocol itself in order to make scalability possible. Layer-2 solutions are networks or technologies that operate on top of an underlying blockchain protocol to improve efficiency and scalability.
While Bitcoin, Ethereum, and Litecoin are Layer-1 blockchains, Lighting Network is a Layer-2 solution that was built to increase the transaction speeds on the Bitcoin network.
When it comes to Layer-1 solutions, they change the rules of the blockchain’s protocol to increase its transaction speed and capacity and thus accommodate more users and data.
For example, a Layer-1 scaling solution could be used to accelerate the speed of block confirmation or to augment how much data a block contains. Such solutions would then increase the network’s throughput.
Types of Layer-1 Solutions
The two most common Layer-1 solutions include the following:
Consensus Protocol Changes
Since some consensus mechanisms are more efficient than others, projects such as Ethereum are moving from the slow Proof of Work mechanism to Proof of Stake. The latter ensures higher speeds and is more energy-efficient than the former as it doesn’t require miners to solve complex cryptographic algorithms and thus use substantial computing power. Instead, a PoS system processes and validates the new blocks of data based on the participants’ stake.
Sharding
Sharding is one of the most popular layer-1 scalability methods, and it is a mechanism that has been adapted from distributed databases. Through sharding, transaction sets are broken down into smaller pieces, known as “shards,” which are processed by the network in parallel. Since the workload is spread across the peer-to-peer network better, blocks are completed faster. Ethereum 2.0, Tezos, and Zilliqa are exploring the use of shards.
Conclusions
Scalability becomes an issue when the amount of data that passes through a blockchain is limited because of its insufficient capacities. To overcome such problems and ensure faster processing times and a higher number of transactions per second, blockchain developers are working on scaling solutions.
Layer-1 solutions improve the base protocol of a blockchain by changing how it operates in terms of data processing. One of their advantages is that there is no need to add something on top of the existing infrastructure. Changes to the blockchain’s consensus protocol and sharding are two such solutions.
Animation of the day: Elrond explained via animation:
Tania
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The Altcoin Pulse
1. Polygon adds fiat on-ramp for DeFi applications.
2. An airdrop worth $500m+ - a boost to test important crypto/blockchain applications that can be decentralized in the future.
https://www.coindesk.com/business/2021/11/09/ethereum-name-service-tokens-soar-after-500m-airdrop/
3.$DOT worth $1bn was allocated to auctions for the parachains on Polkadot. The projects with the most $DOT locked are Acala Network (10.9m $DOT) and Moonbeam (6.0m $DOT), two smart contract platforms that are Ethereum-compatible and focused on cross-chain DeFi.
https://dotmarketcap.com/auction/polkadot
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Interesting Headlines
1. The last week stood out by net flows of $172m in the digital asset funds tracked by CoinShares. Most volumes went into Bitcoin funds ($91m). Ethereum continues the series of positive net flows ($31m), while Solana ($10m), Polkadot ($9m), and Cardano ($5m) attract significant amounts. Tron drew attention earlier this month, with the funds invested in it attracting $22m (25% of the total).
MTD=month-to-date (November), YTD=year-to-date, AUM=total assets
2. The Discord community splits after CEO Jason Citron hints at a possible integration with the crypto world through a pre-released screenshot.
3. ConsenSys founder Joe Lubin offers some clues about a possible future MetaMask governance token.
https://thedefiant.io/joe-lubin-teases-metamask-token/
4. Tim Cook says he owns crypto. How many S&P 500 CEOs are in the same position but have not been "asked" yet?
https://www.cnbc.com/2021/11/09/apple-ceo-tim-cook-says-he-owns-cryptocurrency.html
5. Reddit co-founder Alexis Ohanian is preparing a $100m fund geared towards the development of decentralized social media platforms on Solana.
6. Neon Labs, a project developing a Solana EVM, has conducted a private funding round of $40m. A Solana EVM would make it easier for Ethereum-based dApps to be integrated with Solana as well.
7. Coinbase introduces Coinbase Wallet as a standalone browser extension.
8. Mastercard will launch crypto-based credit cards (allowing the instant conversion of the crypto token into fiat and making a payment) in the APAC region.
9. The total volume traded on OpenSea exceeded $10bn.
https://decrypt.co/85507/nft-marketplace-opensea-hits-10b-total-volume
10. Decision day: the deadline for VanEck's spot Bitcoin ETF filing is November 14th. A denial from the SEC is likely, but the reasons behind this decision are the ones holding significance.
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Tweet of the week:
Have you missed the airdrop from ENS? Some ideas on how you could seize others in the future :)
Business book of the week: Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy Social World by Gary Vaynerchuk. Although the book is not new, there are many ideas that would do well as standard practices in today's marketing, even more so in crypto.
Youtube clip of the week: Benjamin Cowen on Why Ethereum is an absolute beast.