The Crypto Insider Report #7: In Touch With Reality
Disclaimer: Everything we write in "The Crypto Insider Report" is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
In an industry where x's seem to be on all streets and projects announce billions of dollars in incentives, we can easily lose the sense of proportions. When thinking up Stakeborg DAO with my colleagues, one of the things I stuck in my head was not to forget what each step we have to take means and to make sure that we properly celebrate every milestone no matter how small it seems in the broader context of crypto.
Epoch 4 ended yesterday, and with it, the first month of $STANDARD. We managed to increase the TVL up to over $6 million, to keep the price in a decent balance that allows those in the community to invest in the early stages when the gas price is as low as possible, to increase liquidity to over 2.3 million, and to distribute without major problems almost 2% of the supply.
Yesterday I saw that we exceeded the $2.5 million market cap. It was the moment when I realized that I had to take a step back, be grateful for everything that happens to me, and reiterate that we as a team should not lose touch with reality.
Of course, it's just an episode of a much longer and more arduous setup, but I'm sure the way we started is fair, healthy, and staged with the best of intentions. And so it will remain no matter how tempting it will be to cut corners and follow the industry's motto "if that one did so and it worked, why wouldn't I be allowed to do the same?"
Kain was telling me in a recent discussion that history would repeat itself, and when the major market corrections come, the sieve will sift, and people will pay greater attention to what they invest in. A handful of projects in each niche will concentrate 90% of the non-bitcoin and ethereum liquidity.
It's important to smell good when you make money, and those who understand this and execute their roadmap and mission like there is no market cap involved eventually end up being the biggest winners. Meritocracy always wins, only that sometimes it takes longer than the patience of those who believe in it.
Take care,
Vlad
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The first steps in crypto: What Is an ETF?
An exchange-traded fund, or ETF, is a type of investment fund that is traded on an exchange. ETFs have an associated price and a ticker and can be bought and sold like a stock via a traditional brokerage account throughout the trading day.
They can be structured to track an underlying asset or index, so anything from an individual commodity or asset, such as gold, to a basket of assets, such as the well-known S&P 500. Therefore, they can contain various types of investments, including but not limited to commodities, stocks, or bonds.
One of their greatest advantages is that they allow investors to diversify their investment portfolios without actually owning the assets themselves. For example, as the name suggests, a Bitcoin ETF tracks the price of Bitcoin, so those interested can invest in the cryptocurrency without directly owning it.
They usually have lower fees than other types of funds, as well as varying levels of risk. ETFs appeared in the U.S. in 1993, when State Street Capitol launched SPDR S&P 500 ETF, and they are listed on exchanges like the Nasdaq, the New York Stock Exchange, and the Shanghai Stock Exchange.
ETFs are often associated with mutual funds, but one major difference is that just like stocks, the price of an ETF’s share changes throughout the trading hours as the shares are bought and sold on the market. Mutual funds, on the other hand, are priced just once a day.
How Does an ETF Work?
Simply put, an ETF works as follows:
An ETF provider, which is a company that makes exchange-traded funds, designs a fund to track the performance of various underlying assets. It then creates a basket of them using a unique ticker.
As an investor, you can then buy and sell a share of that basket. The process is similar to buying and selling shares, and in the case of ETFs, investors can buy units in an ETF through a stockbroker. The ETFs are then traded throughout the trading hours on an exchange, much like a stock.
Some popular ETF providers include Vanguard, iShares by BlackRock, and State Street.
Advantages and Disadvantages of ETFs
ETFs come with several benefits, including the following:
Ease of use - ETFs are easy to trade, and investors can buy and sell at any time during the trading hours of the exchange. Plus, they can buy a basket of shares or assets in a single trade.
Diversification - ETFs enable investors to access many stocks across various industries that may otherwise be expensive or difficult to access.
Transparency - Index-based ETFs publish their holdings daily, unlike mutual funds that do so monthly or quarterly. In addition, an investor can always search the price activity for a particular ETF.
Low cost - many ETFs have a low management expense ratio (MER) and fewer broker commissions.
However, ETFs are not free of disadvantages. Some of them include:
Currency risk - in case an ETF invests in international assets, the currency movements impact the investor’s returns.
Liquidity risk - some ETFs invest in illiquid assets, which can hinder transactions.
Tracking errors - given that ETFs track the price of the underlying index, there is the risk of technical issues occurring, which can create discrepancies.
Conclusions
ETFs are investment vehicles designed to track the performance of a particular asset or group of assets. Their success is mainly due to the ease of use they ensure as investors can diversify their portfolios without actually owning the underlying assets.
There are many types of ETFs, such as bond, commodity, market, inverse, and actively-managed ETFs, which enables investors to access stocks from different sectors. However, even if they are easier to trade, they do have some drawbacks, including potential liquidity issues.
Animation of the day: Multi-Sig wallets:
For more animations: Cryptomatics
Tania
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The Altcoin Pulse
1. The Solana ecosystem has over 500 projects.
2. BOBA Network, a recently released L2 scaling solution on Ethereum, reaches a $1.35bn TVL.
https://thedefiant.io/boba-layer-2-1b-tvl/
3. Several future token releases and listings, and other events.
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Interesting Headlines
1. Adidas announces a partnership with Coinbase - probably nothing.
2. A fund managed by Morgan Stanley, Morgan Stanley Institutional Fund Growth Portfolio, added over 2.64 million shares of GBTC to its position in Q3.
https://blockworks.co/morgan-stanley-funds-add-more-than-2-64m-shares-of-gbtc-in-q3/
3. In the first 9 months of 2021, crypto start-ups raised funding of over $15bn, 5x more than the total amount for 2020.
https://blockworks.co/novembers-crypto-vc-funding-already-tops-3-billion/
4. Coinbase has acquired the self-custody digital wallet company BRD, which has over 10 million customers globally.
5. Kazakhstan's Bitcoin mining industry is facing an over-heating of its electricity grid.
6. A pension fund in Australia plans to allocate a part of its portfolio to crypto.
https://cryptopotato.com/40-billion-austalian-pension-fund-rest-super-plans-to-invest-in-crypto/
7. Customers of Estonia's largest bank will be able to trade crypto through the bank's mobile application.
https://uk.finance.yahoo.com/news/estonia-lhv-bank-crypto-trading-bitcoin-ethereum-151922367.html
8. Volumes traded on DEXs are increasing and approaching $100bn/month - the ATH of $162bn was reached in May 2021.
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Tweetstorm of the week:
It's not about crypto, it's about people, but in crypto, there are many people, so it's also about crypto :) Plus, it's very good.
Business book of the week: We keep hearing about the importance of specialization. Range: Why Generalists Triumph in a Specialized World comes with another perspective that, frankly, I resonate with.
Youtube clip of the week: 15 assets that are more useful than cash: