💥 A month ago, a friend of mine told me about his experience with XRP. He decided to sell a large amount of XRP, thinking the price would go down and then buy it back lower during the bullrun. He thought he had the market under control… but he couldn't have been more wrong.
👉 Result: After selling, the price kept going up, and when he finally wanted to buy back, he was left behind. He ended up losing 70 XRP just by trying to play the prices.
Why is this so risky? 🤔
1️⃣ The rise can be unstoppable:
In a bullrun, cryptocurrency prices can keep going up faster than you expect. Selling in the hope of buying cheaper can be a trap, as the market doesn't always follow expectations. The price keeps going up and you're out. 📈🚀
2️⃣ FOMO is real:
When you sell thinking you'll get a better price, you risk getting into FOMO (Fear Of Missing Out) when the price goes up more than expected. Trying to get in again can be costly. You get caught up in the wave of panic for not having bought when you had the chance. 😬💸
3️⃣ The crypto market is unpredictable:
Despite predictions, no one can predict with certainty where the market is going. Selling at a low point to buy cheaper sounds logical, but it's a risky move, as you could miss out on bigger profit opportunities if the market doesn't go down. 🔮⚠️
4️⃣ The cost of waiting:
Every time you wait for the price to go down before you re-enter, the market can keep moving forward without you. Timing is one of the most important factors in bullruns. The longer you wait, the more you risk missing out on the rally. ⏳💥
What is the best strategy? 🏆
Hodling during a bullrun gives you the opportunity to take advantage of growth without the anxiety of making moves you might regret later.
Crypto for Advisors: Understanding the Ethereum Economy
Numerous other applications, known as layer-2 or L2 protocols, are being built in addition to Ethereum's functionality. Research analysts Christopher Jensen and David Alderman from Franklin Templeton Digital Assets discuss how Ethereum underlays the Platform economy.
In Ask an Expert, David Lawant from FalconX answers questions about staking and other applications built on Ethereum.
Happy reading.
– S.M.
You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.
Using Ethereum to Understand the Protocol Economy
Most investors are familiar with the business model of the entrenched platform economy, in which a set of powerful tech companies rely on the network effects that they generate to obtain proprietary data, goods or content from users. These tech giants dictate terms favorable to their own businesses yet often limiting for users’ interests. One of the most exciting and perhaps underappreciated aspects of blockchain technology is that it has enabled a new business model – what we call the protocol economy. A blockchain, in its simplest form, is a secure digital ledger that, without the use or need of intermediaries, records new activity to its ledger in exchange for a fee while adhering to its protocol (rules for how the process works). Why does this matter? Blockchains enable digital property rights. Digital scarcity and ownership can now, for the first time, be enforced through software and code rather than organizations and people.
However, not all blockchains function the same way. The Bitcoin network is an application-specific blockchain. It essentially does one thing – records wallet addresses and BTC amounts – but does this very well. It’s secure, transparent and permissionless. Ethereum, on the other hand, is a general-purpose blockchain. Its programming language, along with the introduction of self-executing smart contracts, allows for more complex “if-then” activities. This innovation transforms blockchains from mere distributed ledgers into powerful, global virtual computers. These virtual machines enable developers to create comprehensive applications across various domains securely and autonomously, from marketplaces and financial tools to social networks and even other blockchains.
Ethereum's robust security layer and broader functionality paved the way for new digitally native economies to be built on top of its infrastructure layer. Tokens in such ecosystems are not just currencies but also integral to the network's incentive structure, encouraging coordination and integrity within the decentralized system. Holding Ethereum’s ether token (ETH) signifies more than transactional utility; it represents an ownership stake in Ethereum's network, offering both participatory and economic benefits aligned with the ecosystem's growth. Moreover, the fundamentals of Ethereum’s network can be analyzed in a similar fashion to non-digital companies, which may help inform what ETH is worth (similar to a stock, albeit with some different metrics and nuances).
The protocol economy of Ethereum currently has over 115 million token holders, which has grown at double-digit annual rates over the past four years. Monthly active users grew 25% year-over-year last month and now stands at 6.1 million. If users on Ethereum layer 2s (blockchains built on top of Ethereum to help scale the ecosystem) are included, that user base is over 10 million. Total value locked, the amount of capital stored in Ethereum’s DeFi smart contracts, rose to greater than $50 billion. However, this figure still massively understates the total economic value that the chain secures, which is estimated at $740 billion. And, while Ethereum’s developer count is down year over year, most of that attrition is due to new, part-time developers while the ecosystem’s established developer base continues to rise.
Ethereum’s financial state is likewise robust, with year-to-date total fees and gross profits both up triple digits year-over-year, and revenue for the last 12 months (LTM) revenues stands at $2.7 billion. Furthermore, the network has an ~85% gross margin and is profitable (25% net profit margin) even when accounting for the non-cash token incentives.
So how does one get exposure to this breakthrough technology asset and, just as importantly, the $740 billion value built on top of the chain? Assuming a protocol’s tokenomic design has a value accrual mechanism that allows the value of the network to be captured, then there’s a case to be made for holding the token. When any kind of economic activity happens anywhere in the Ethereum ecosystem, fees (revenues) are generated. Some of those fees fund the network’s security costs (COGS), while the remainder supports token value through strategic buy-and-burn mechanisms (akin to share repurchases). This approach highlights the advantages of protocol economies over traditional platform economies. Rather than buying stock in a company that built a platform that attracted a network, investors and users alike can now own a direct stake in their network’s success.
- Christopher Jensen, director of research, Franklin Templeton Digital Assets
Ask an Expert:
Q. What types of applications are already available on platforms like Ethereum?
A: Ethereum's programming language is designed for high expressiveness, enabling the creation of various applications. While we are still in the nascent stages and innovative entrepreneurs are likely to build groundbreaking applications that we can’t imagine today, the potential impact of crypto on numerous major industries is already evident.
Take decentralized finance (DeFi) as an example; it offers a novel approach to developing and utilizing financial services with minimal dependence on central intermediaries. DeFi platforms can perform extensive services, including trading, lending, borrowing, and even rudimentary asset management functions. Moreover, the evolution of digital property rights has given rise to a vibrant non-fungible token (NFT) ecosystem over recent years. This ecosystem allows tokens representing ownership – from art pieces to concert tickets – to be more fluidly incorporated into our digital existence.
Other significant sectors gaining momentum include decentralized social networks, where users can exert greater influence than conventional models, and gaming, which can significantly expand its design possibilities by incorporating crypto elements. Additionally, artificial intelligence may soon necessitate the secure and verifiable logging of human-generated content within a transparent and immutable ledger, a function uniquely suited to blockchain technology.
Q. What is staking, and how does it work?
A: Staking is an integral process in networks like Ethereum, which rely on proof-of-stake (PoS) to support network operation. It involves participants locking up a certain amount of their cryptocurrency holdings to support the network's operations, including transaction validation and security. This contrasts with networks like Bitcoin, which operate under a proof-of-work (PoW) system and utilize energy-intensive computations to secure the network.
Ethereum switched from proof-of-work to proof-of-stake in September 2022 and, as a result, allowed ETH holders who want to contribute to the network security to derive a native yield in exchange for this extra work. This process is called staking.
The interest rate ETH holders can provide is called the staking rate, and it depends on various factors like the number of validators participating in staking and network transaction fees. Over the past six months, this rate has mostly hovered between 3% and 4%, according to the CESR, a standardized benchmark Ethereum staking rate.
- David Lawant, head of research, FalconX
Keep Reading
JP Morgan analyst said that bitcoin has now overtaken gold in investor portfolio allocation when adjusted for volatility.
Fidelity amended their spot ETH ETF application to include provisions for staking the cryptocurrency.
The London Stock Exchange has announced plans to accept applications for bitcoin and ether crypto exchange-traded notes.
Set Your Profile: Share in $1,000 FDUSD & Win Binance Merchandise!
We're rewarding YOU for just enhancing your Binance Square profiles! Get your share of 1,000 FDUSD and stand a chance to win some cool Binance Merch! 🚀 Promotion Period: 2024-03-05 08:00 (UTC) to 2024-03-10 23:59 (UTC)
💠 Task: 1. Set up your Binance Square profile (nickname, avatar, username, and bio). 2. Reply to this post with your nickname.
🎁 Promotion A: Users who hadn't set up their profiles before 2024-03-05 08:00:00 UTC are eligible for rewards. The first 2,000 users to complete both tasks, based on the reply timestamp, will share 1,000 FDUSD in token voucher rewards.
🎁 Promotion B: Binance will select 10 replies that end in the ranking number "100", based on the reply timestamp (i.e., ranks 100, 1,100, 2,100, 3,100, ...., 9,100). Each selected user will receive a random Binance merchandise.
So, why wait? Make your move, enhance your profile and grab your rewards! Tips: How to Set up Your Binance Square Profile 👇
Terms&Conditions: This promotion may not be available in your region.All users must set up their profile before the campaign ends to be eligible for rewards from Promotion A&B. A user can win rewards from both Promotion A & B.Each winner of Promotion A will receive 0.5 FDUSD each. The FDUSD token voucher rewards will be distributed within 15 working days after the promotion ends. Users may check their rewards via Profile > Rewards Hub. The validity period for the token voucher is set at seven days from the day of distribution. Learn how to redeem a voucher.Winners of Promotion B will receive a random Binance merchandise as part of their rewards, and will be notified within 15 working days via Square Assistant push to collect delivery information.If chosen users are from regions not eligible to join the promotion or are identified as ineligible, the reward will go to the next eligible user who meets the conditions.Illegally bulk registered accounts or sub-accounts shall not be eligible to participate or receive any rewards.Binance reserves the right at any time in its sole and absolute discretion to determine and/or amend or vary these terms and conditions without prior notice, including but not limited to canceling, extending, terminating or suspending this campaign, the eligibility terms and criteria, the selection and number of winners, and the timing of any act to be done, and all participants shall be bound by these amendments.Binance reserves the right to disqualify any account acting against the Binance Square Community Guidelines or Terms and Conditions.
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🚨 Important Announcement: Confirmed $MASK Airdrop 🪂
Metamask has revealed the largest airdrop to date, offering an impressive $725M in rewards! The best part? Qualifying for this windfall requires just two simple steps. Here's your comprehensive strategy for maximizing the airdrop:
Airdrop Strategy:
✨ Cost: Only $10 ✨ Potential Average Reward: An astounding $6000
Qualify with 2 Easy Actions:
1. Swap: - Visit [Metamask's portfolio](https://portfolio.metamask.io) - Connect your wallet - Click "Swap" - Choose your desired token and initiate the swap
2. Bridge: - Navigate to [Metamask's portfolio](https://portfolio.metamask.io) - Connect your wallet - Click "Bridge" - Select the network and tokens for bridging - Press "Approve" and then "Confirm" to finalize the process
Final Step:
But that's just the beginning! Here's the initial phase of your journey:
Criteria: - Complete a minimum of 6 swaps - Bridge transactions across 5 different networks - Achieve a trading volume of $1000 or more
Seize this incredible opportunity to partake in the largest airdrop in history. Take action now and secure your portion of the $MASK airdrop!
🫂Remember: A lot of Hardwork goes into for providing you Best Investment Articles.Your Generous Tips would Empower our Mission and help us to work even Harder for you to give Best Investment Advice.
If you exchange $5000 for 0.1 Bitcoin today, you have the same amount of money for which 20 years later millions of people all over the world will spend their resources, time and labor for ~10 minutes to produce 0.1 units of a money, whose total amount will be exhausted by 97.66% til then.
This $5000 will be 0.000...1% of the US dollar money supply in 2044, when ~0.1 Bitcoin will make up the block subsidy of a Bitcoin block reward. By then that $5000 probably won't even get you a week's groceries.
You have the choice: a week's groceries worth of purchasing power, or generational wealth. A small decision with immense consequences.
📌 If you find this information helpful, consider supporting me.Follow me and like,share,quotes this post.. Your generosity helps me provide quality content.
If you exchange $5000 for 0.1 Bitcoin today, you have the same amount of money for which 20 years later millions of people all over the world will spend their resources, time and labor for ~10 minutes to produce 0.1 units of a money, whose total amount will be exhausted by 97.66% til then.
This $5000 will be 0.000...1% of the US dollar money supply in 2044, when ~0.1 Bitcoin will make up the block subsidy of a Bitcoin block reward. By then that $5000 probably won't even get you a week's groceries.
You have the choice: a week's groceries worth of purchasing power, or generational wealth. A small decision with immense consequences.
📌 If you find this information helpful, consider supporting me.Follow me and like,share,quotes this post.. Your generosity helps me provide quality content.
Cryptocurrency giant Binance has announced an exciting airdrop valued at an impressive $1,000,000. Designed to reward users of the platform, this event offers a unique opportunity to exchange select tokens and earn valuable rewards. Exemplifying its commitment to the community, Binance seeks to encourage participation and adoption of cryptocurrencies among its users through this generous initiative.
💥💥 Top Six Famous Altcoins of 2024! It's Waiting For You Under $0.10 🔮
Excitement is at its peak in the crypto world! Are you ready? With this excitement, here is the list of 10 altcoins that will skyrocket in the crypto bull run of 2024! 💥
While we are busy with major altcoins, we draw your attention to these small but very valuable coins under $0.10. Because these coins are ready for a big explosion! 🔍
BONK (BONK): 🐸 BONK, the most popular meme coin on Solana, is preparing for a bull run. At the end of the consolidation, massive gains are on the horizon as it breaks above $0.000025! PREMIERE: 🎮 Amid the gaming/Metaverse craze, GALA is waiting for a comeback. A potential double bottom pattern, a move towards $0.035 is expected if the bulls take control. Shiba Inu (SHIB): 🐕🦺 With a market cap of $5.30 Billion, SHIB is positioning for a bullish breakout. A rally above $0.000010 could lead to serious gains. Dogecoin (DOGE): 🚀 Even though it is facing difficulties, DOGE is still bullish. A breakout above $0.10 is expected, supported by expectations of a new altcoin season. Oasis Network (ROSE): 🌹 ROSE remains above $0.10, presenting a bullish opportunity. A breakout above $0.115 could signal more upside. Siacoin (SC): 🔄 Preparing for a reversal, SC is targeting a breakout above $0.013 and may reach $0.025 with increasing momentum. Hedera Hashgraph (HBAR): ⛓ HBAR is testing the 50-day EMA, showing potential for a bullish reversal. Its target is $0.12. HEX: 🔮 HEX aims to reach $0.014. Consolidation near $0.010 signals a bullish breakout. Marlin (POND): 🌊 With its high performance capabilities, POND may see a sharp bull run. It is supported by increasing trading volume. Status (SNT): 📈 SNT withdrawn after the increase, 0.It is heading towards $05. Lower price rejection and RSI divergence signal a reversal. 📈 The crypto market is heating up! Don't miss these potential gems!