Chinnapong
Major upgrades across smart contract platforms lay the groundwork for scaling blockspace availability without the $50 gas transactions that marked the last bull cycle.
Global government bonds are on track for their worst annual loss since 1949 as G4 liquidity has tightened at a record pace. CEO confidence is close to an all–time low. The American Association of Individual Investors reports a record high in bearish sentiment. The dramatic pace of the rise in the 30–year mortgage rate is consistent with an ISM of 25. Cyclicals’ next–12–month price–to–earnings ratio vs. the S&P 500 Index is at an all–time low. U.S. home prices as a ratio of U.S. disposable income ratio just hit an all–time high, implying imminent recession—the odds of which Ned Davis Research pegs at 98%. The Merrill Lynch bull and bear indicator hit 0.0. Commercial banks, foreigners and the Fed have all turned net sellers of treasuries over the past six months, reflecting a combination of de–globalization and inflation fears. All of the above are extremely rare!
Amidst the consensus bearishness, we are still buying Bitcoin (BTC-USD) and other digital assets every month. In our view, crypto prices are a call option on an alternative financial future based on Bitcoin, and these call options are much cheaper now. The top 10 cryptocurrencies by market cap are down an average of 80% from their peak. Seasonal trends are highly favorable, with the S&P 500 making nine major lows in the month of October since 1932, four times as much as a normal distribution would suggest. Forward inflation indicators such as commodity prices imply that market expectations of continued central bank tightening in 2023 are misguided. In the last five Fed tightening cycles, stocks bottomed within three months of the onset of tightening; in 1983, the sixth most recent, stocks bottomed after 16 months of tightening. We are currently seven months into the current tightening regime. If pro–Bitcoin Florida Governor Ron DeSantis continues to lead former President Donald Trump in the betting markets, we can easily imagine another crypto bull market beginning by mid–2023 on optimism around more free–market government policies and the next Bitcoin halving, which is scheduled for March 2024. We believe the next few months present good timing to be tilting portfolios towards more risk.
With regards to Bitcoin specifically, we note some real signs of seller exhaustion in the data. The Bitcoin bear market is now 325 days old vs. an average of 375 over the last two cycles. The ratio of BTC held by long–term holders is back to multiyear highs, but so is the percentage of that old Bitcoin which is held in a loss! As recounted by Stanley Druckenmiller in early 2021: “do you know that when Bitcoin went from $17,000 to $3,000 that 86% of the people that owned it at $17,000, never sold it?” As seen in the below chart, that high loyalty persists, despite the bankruptcies of multiple Bitcoin miners and exchanges.
Bitcoin: Amount Held by Long–Term Holders (155 Days +) vs. Amount Held in Loss by Long–Term Holders
Source: Glassnode as of 9/30/2022.
Lastly, we also want to highlight increasing web 2.0 adoption of web3 during the month. In September alone:
- Starbucks launched its loyalty NFT program on Polygon (MATIC-USD)
- Facebook and Instagram users can now connect crypto wallets to share NFTs (MATIC, FLOW, ETH)
- Christie’s auction house announced an on–chain NFT art platform (ETH-USD)
- Ticketmaster continued its web3 push by letting event organizers release their own NFTs (FLOW-USD)
The number of Fortune 500 companies with cryptocurrency partnerships now exceeds 50%, per data from TheTie.
Cumulative Fortune 500 – Cryptocurrency Company Partnerships
Source: TheTie, as of 9/30/22.
Anyway, for the month (8/31–9/30), Bitcoin fell 3%, the MVIS CryptoCompare Smart Contract Leaders Index fell 8%, the Nasdaq Composite fell 10%, and Ethereum fell 17%.
| Digital Asset | Market Cap | 7 Days | 30 days | 90 days | 365 days |
| Bitcoin | $370.14B | 1.98% | -4.05% | 0.22% | -59.86% |
| Ethereum | $160.82B | -0.48% | -17.30% | 23.77% | -60.34% |
| Digital Asset Index | Market Cap | 7 Days | 30 Days | 90 Days | 365 Days |
| MVIS® CryptoCompare Decentralized Finance Leaders | $7.51B | 8.16% | -9.3% | 19.33% | -75.05% |
| MarketVector™ Centralized Exchanges | $53.95B | 5.05% | -0.7% | 29.02% | -27.30% |
| MVIS® CryptoCompare Infrastructure Application Leaders | $14.48B | 10.90% | 6.6% | 39.18% | -68.10% |
| MVIS® CryptoCompare Media & Entertainment Leaders | $6.44B | -2.74% | -2.7% | 8.78% | -68.58% |
| MVIS® CryptoCompare Smart Contract Leaders | $219.02B | 2.02% | -7.8% | 13.91% | -71.11% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
Smart Contract Platforms
Smart contract platforms saw major protocol upgrades across multiple chains in September. These upgrades lay the groundwork for scaling blockspace availability without the $50 gas transactions that marked the last bull cycle. However, in the short term, we estimate that due to inflationary monetary policy across major crypto protocols, the asset class requires $6B+ of monthly inflows to support token prices, the majority of which needs to go into Bitcoin and layer 1s. In a world of tightening liquidity and one–year T–bills at ~4%, Ethereum’s ~5% staking yield is decidedly less attractive.
Ethereum successfully migrated to proof–of–stake, though the transition failed to ignite any material acceleration in on–chain activity. As speculators unwound considerable long spot exposure and closed short futures positions, funding rates normalized from extreme backwardation, but the 3–month annualized futures rolling basis still remains negative as of October 3, reflecting lackluster demand for leverage in the space. Without leverage, DeFi doesn’t grow, and if DeFi isn’t growing, it’s hard for Ethereum (with ~60% share of DeFi) to attract meaningful inflows. Thus, Ethereum fell 17% in September, lagging most large–cap smart contract platforms. Future catalysts for ETH include the Devcon conference in Bogota October 11–14, and the mainnet launch of zkSync, one of the most promising zero–knowledge proof based layer 2 scaling protocols, at the end of October.
Algorand (ALGO-USD) introduced cross–chain communication and transaction speed improvements with the release of State Proofs to its network. State Proofs are cryptographic proofs of Algorand’s state that allow DApps (decentralized applications) to trustlessly verify Algorand transactions, balances, and application data, even from low–power environments like a phone or smartwatch, without compromising on security. As an example, a new node joining the Algorand network won’t have to verify the whole transaction history (every block) but instead verify State Proofs produced by the validators each 100 blocks. This should lower the amount of time required to sync with the chain and also reduce hardware requirements. The upgrade also increases Algorand’s processing speed from 1,200 to 6,000 transactions per second. Lastly, Algorand, as FIFA’s official blockchain partner, also benefited from increased proximity to the World Cup Football tournament with the release of a new NFT platform “FIFA+ Collect”, which features affordable NFTs that depict notable soccer moments. We would note that take–up so far has been muted, with only 75k NFTs claimed of the 532k available.
Cosmos (ATOM-USD) released a new white paper at the Cosmoverse conference in Medellín, Colombia. The Cosmos Hub 2.0 white paper outlines a revamped role for the Hub as the heart of interchain security – meaning other chains will be able to use the Hub to secure their own networks. The white paper also proposes changes to the utility and issuance schedule of ATOM – changes that the paper’s authors think will back up its informal role as an index of the broader Cosmos family of blockchains. We expected this catalyst, and SCL benefited from our overweight position in the coin, as detailed in recent research here.
Sweatcoin bringing users to NEAR: Near Protocol was the fastest growing smart contract platform by usage in September thanks to Sweatcoin’s migration from a centralized database to web3. Sweatcoin is a health and fitness platform that leverages the move–to–earn model by allowing users to convert their physical movements into digital currencies (SWEAT tokens), which they can donate to charities, buy products, or convert to other cryptocurrencies. NEAR’s daily active user base increased by 6x in September to around 100k.
Lastly in the sector, we note that Binance (BNB-USD) is increasing its investment in Aptos Labs, an emerging, monolithic smart contract protocol built in the Move programming language by former Facebook Diem engineers. Move is an iteration of Rust, which is the most loved programming language in the world according to a recent stackoverflow survey. Binance’s additional investment follows on Aptos’ two equity raises earlier this year of a combined $350M, at a valuation of $2B. With FTX also reportedly writing a check to Aptos earlier this year, it seems clear that major crypto exchanges are hedging their Solana (SOL-USD) exposure by supporting another monolithic layer 1.
Daily Active User Growth – 1 Month Rolling Ratio
Source: Dune Analytics, MVIS, VanEck research as of 9/30/2022. “0” is the benchmark for no change in daily active users over the prior month.
| Marketcap | 30 days | 365 days | |
| Cosmos | $3.72B | 13.57% | -61.45% |
| Algorand | $2.36B | 13.51% | -78.39% |
| Solana | $11.61B | 0.73% | -75.30% |
| Ethereum | $161.25B | -16.11% | -53.61% |
| Waves (WAVES-USD) | $0.42B | -16.98% | -83.41% |
| EOS (EOS-USD) | $1.14B | -23.95% | -69.16% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
Infrastructure
Infrastructure coins outperformed dramatically in September but with narrow breadth.
Quant Network (QNT-USD) was the biggest winner at +31%, on speculation that their interoperability protocol for blockchains, called “Overledger”, would find adoption across governmental and regulatory bodies. Overledger’s goal is to connect existing enterprise technologies with decentralized blockchains. There might be some substance in the rumors given the project founder’s past experiences in the public and private sectors. (Gilbert Verdian founded Quant Network in 2018 after more than 20 years of cybersecurity experience at the UK Ministry of Justice, PwC and HSBC. He also established the Blockchain ISO Standard TC307 initiative in 2015.) That said, we can’t confirm much about the project’s fundamentals, as Quant doesn’t have an open–source blockchain, nor publicly available metrics.
Chainlink (LINK-USD) rose 6% in September coinciding with the protocol’s first “in–real–life” SmartCon conference in NYC, at which Chainlink announced a partnership with SWIFT on a project which would allow traditional finance firms the ability to transact across blockchain network. In the proof–of–concept announced, Chainlink’s cross–chain interoperability protocol (CCIP) would enable SWIFT messages to instruct on–chain token transfers. Founder Sergey Nazarov also released more detailed plans to enable staking by the end of year, with revenue generation enabled from two new programs: SCALE, which will charge blockchains such as Avalanche (AVAX-USD) and Moonbeam for data feeds, and BUILD, which give discounted fees to emergent blockchain–based projects in return for early access to tokens. According to the protocol, Chainlink has facilitated $6.2T in transactions YTD in 2022.
Helium (HNT-USD), the cryptocurrency that powers a decentralized network of IoT hotspot nodes, fell 6% amidst high volatility in September after Nova Labs, the development company behind Helium, announced an agreement with T–Mobile (TMUS) to cover 5G dead spots using Helium’s network of hotspots. Nova Labs will use T–Mobile’s nationwide network to provide coverage for Helium mobile customers in places where the Helium 5G network doesn’t provide coverage. A beta version of the service is expected to launch in the first quarter of 2023, with $5/month nationwide coverage for subscribers and the possibility to earn additional crypto rewards by selling personal data to the network. In addition, the Helium community voted to adopt HIP–70, a proposal to migrate Helium to the Solana network. The move to Solana will help scale the protocol through more efficient transactions as well as interoperability with DeFi, where currently HNT tokens cannot be lent or borrowed. At an event in New York City in September, Helium Systems CEO Amir Haleem said that Helium developers were currently spending 70% of their time on layer 1 blockchain functionality, which is not the project’s core competency, necessitating a move to a bigger community, aka Solana.
One notable development in the infrastructure sector last month was the news that Ethereum tooling developer Infura plans to launch a decentralized remote procedure call (RPC) network to address concerns that its core product is too centralized to underpin the Ethereum ecosystem’s demand for censorship resistance. For background, Infura, which last raised a Series D in March that values the company at $7B, provides backend infrastructure for web3 companies to launch their products without having to run a full node. As Infura has gained market share, running major pieces of web3 infrastructure including Metamask (21M monthly active users as of March 2022), Uniswap and MakerDao, many in the Ethereum community have raised concerns about Infura’s degree of control. Infura’s new, decentralized network promises access to Ethereum and other blockchains without a single point of failure, akin to what Pocket Network (POKT) has been doing. We see the move as continued validation that algorithmic stablecoins, privacy–oriented protocols, and decentralized infrastructure services will continue to gain market share.
Lastly among infrastructure projects, ENS (ENS-USD) domain registrations hit an all–time high in September. ENS is a blockchain equivalent to Domain Name System (DNS) that assigns addresses on the internet. It translates cumbersome Ethereum addresses comprising random numbers and letters into human readable names at the cost of an annual registration fee. September saw more than 400k ENS renewals, an unprecedented level which generated more than $5M of revenue for the protocol’s treasury. The New England Patriots football team made its web 3.0 debut, purchasing “patriots.eth” for 75 ETH, while Shark Tank investor Matt Higgins bought multiple names for over $100,000 in September alone. We see this market as profitable, growing, and with winner–take–most characteristics.
ENS Domain Registrations
Source: Dune Analytics, ENS, VanEck Research, as of 9/29/2022.
| Marketcap | 30 days | 365 days | |
| Quant Network | $1.57B | 30.58% | -52.37% |
| Chainlink | $3.98B | 20.51% | -63.47% |
| FileCoin (FIL-USD) | $1.67B | -4.88% | -89.66% |
| The Graph | $0.73B | -7.98% | -84.43% |
| VeChain (VET-USD) | $1.62B | -10.51% | -72.80% |
| Polygon | $6.40B | -10.58% | -30.45% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
DeFi
DeFi coins fell 9% in September, the worst–performing among sectors we track. We note continued regulatory headwinds in the sector, specifically the CFTC’s novel action against the Ooki DAO for operating an unregistered derivatives exchange and failing to implement anti–money laundering and know–your–customer systems. In an unusual approach relying on legal theory from state common law contract and tort cases between private parties, the CFTC argued that DAOs are unincorporated, for–profit associations whose members are personally liable for DAO debts. Membership in the DAO, according to the CFTC action, is determined by voting on any governance action. This interpretation will likely have a chilling effect on DeFi and DAO participants, given that even those voting against an illegal business model would be liable under this construal, hindering good governance and regulatory approval within DAOs.
Compound (COMP-USD) bucked the negative trend, up 22% in September. Compound has launched a third iteration of its core protocol dubbed “Comet”. The upgrade implements a single–asset borrowing model, an upgrade from the pool–risk model. The new model allows users to borrow a single interest–earning asset starting with USDC (USDC-USD). Users are allowed to borrow USDC using ETH, wBTC (WBTC-USD), LINK, and UNI. The deposited collaterals can be withdrawn, but will no longer earn interest. In addressing changes to the collateral model, Compound’s Founder Robert Leshner said: “While you won’t earn interest on collateral anymore, you will be able to borrow more, with less risk of liquidation and lower liquidation penalties, while spending less on gas.” Another key area of focus for Compound was to give more control to the governance community by giving it exclusive control over all future deployments and adjustments of market parameters.
| Marketcap | 30 days | 365 days | |
| Compound | $0.42B | 22.43% | -81.03% |
| PancakeSwap (CAKE-USD) | $0.67B | 19.53% | -73.48% |
| Uniswap (UNI-USD) | $4.68B | -2.85% | -73.31% |
| Thorchain (RUNE-USD) | $0.46B | -21.65% | -76.81% |
| Kyber Network Crystal (KNC-USD) | $0.12B | -33.00% | n/a |
| Synthetix (SNX-USD) | $0.55B | -33.97% | -75.38% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
Metaverse
The MVIS CryptoCompare Media & Entertainment Index fell 3% in September as it continues to perform better since the June bottom, despite floundering NFT sales more generally. VanEck’s proprietary tracker of 30+ blockchain–based games reveals a 9% increase in weekly active web3 gamers in September, though growth stalled out in the second half of the month, as heavyweights Splinterlands, Sweat, DefiKingdoms and Gameta users began to decline.
Chiliz (CHZ-USD) is again the top performer this month in the category, up 11%. As the sports fan–token innovator, Chiliz’s Socios.com platform has been on an aggressive spree of signing deals and partnerships recently, the latest one being the sponsorship of the 2022 Ballon d’Or Awards. Socios currently powers 70 of the top 75 fan tokens (compared to 62 of top 67 last month) listed in FanMarketCap, comprising $350M of the $430M in fan token in market cap.
Lastly in metaverse developments, we want to highlight the private text messages sent from Elon Musk to his brother in April, revealed as part of the ongoing Twitter litigation: “I have an idea for a blockchain social media system that does both payments and short text messages/links like Twitter. You have to pay a tiny amount to register your message on the chain, which will cut out the vast majority of spam and bots. There is no throat to choke, so free speech is guaranteed.” Although Elon eventually concluded that technical limitations prevent short–term feasibility, we believe that some of the upgrades highlighted at the top of this note, along with Ethereum’s sharding techniques, about which Elon is likely unaware, could likely make his vision a reality sooner rather than later.
| Marketcap | 30 days | 365 days | |
| Chiliz | $1.27B | 10.60% | -2.31% |
| Axie Infinity (AXS-USD) | $1.10B | -11.59% | -82.29% |
| Decentraland (MANA-USD) | $1.29B | -12.81% | 12.00% |
| The Sandbox (SAND-USD) | $1.25B | -15.28% | 40.88% |
| Gala (GALA-USD) | $0.30B | -23.86% | -49.00% |
| Audius | $0.17B | -29.52% | -89.08% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
CEX
MarketVector Centralized Exchanges Index fell 0.7% in September, and the sector continues to outperform in the bear market thanks to the more predictable buyback–and–burn tokenomics of its two largest constituents, Binance and FTX (FTX-USD).
Meanwhile consolidation in the space continues with FTX reportedly bidding on Celsius (CEL-USD) assets, just weeks after securing the winning bid for Voyager Digital’s (OTCPK:VYGVQ) assets for $1.4B, a deal which still must be approved by the U.S. bankruptcy court. Little information was given regarding what will happen to Voyager’s customers, still awaiting access to their crypto holdings, with Voyager stating that additional information about crypto access “will be shared as it becomes available.” Meanwhile, Indian crypto exchange WazirX reportedly laid off 40% of its staff, joining the long list of market–makers downsizing including Coinbase, Gemini, Robinhood, BlockFi, BitMex, Crypto.com, Bybit, Huobi, Banxa and Vauld, among others.
| Marketcap | 30 days | 365 days | |
| Celsius Network | $0.36B | 12.74% | -70.23% |
| KuCoin (KCS-USD) | $0.88B | -1.23% | -12.48% |
| BNB | $44.12B | -4.43% | -17.97% |
| Huobi Token (HT-USD) | $0.67B | -9.47% | -41.26% |
| Cronos (CRO-USD) | $2.80B | -10.05% | -24.11% |
| FTX Token (FTT-USD) | $3.14B | -14.08% | -51.19% |
Source: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of 9/30/2022.
Past performance is not indicative of future results.
Sources: Bloomberg, Coinshares, JPMorgan, Dove Metrics, Messari, Blockworks Research, TokenTerminal, TheTie, FanMarketCap, DappRadar, protocol websites, SlashData, Glassnode, CNBC, VanEck research.
Disclosures
Sources: Bloomberg, Coinshares, JPMorgan, Dove Metrics, Messari, Blockworks Research, TokenTerminal, TheTie, FanMarketCap, DappRadar, protocol websites, SlashData, VanEck research.
Index Definitions
Index returns assume reinvestment of all income and do not reflect any management fees or brokerage expenses associated with fund returns. Returns for actual fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. You cannot invest directly in an index.
MVIS CryptoCompare Smart Contract Leaders Index: designed to track the performance of the largest and most liquid smart contract assets, and is an investable subset of MVIS CryptoCompare Smart Contract Index.
MVIS CryptoCompare Infrastructure Application Leaders Index: Designed to track the performance of the largest and most liquid infrastructure application assets, and is an investable subset of MVIS CryptoCompare Infrastructure Application Index.
MVIS CryptoCompare Decentralized Finance Leaders Index: Designed to track the performance of the largest and most liquid decentralized finance assets, and is an investable subset of MVIS CryptoCompare Decentralized Finance Index.
MVIS CryptoCompare Media & Entertainment Leaders Index: designed to track the performance of the largest and most liquid media & entertainment assets, and is an investable subset of MVIS CryptoCompare Media & Entertainment Index.
The MarketVector™ Centralized Exchanges Index: designed to track the performance of assets classified as ‘Centralized Exchanges’.
Nasdaq Composite Index: measures all Nasdaq domestic and international based common type stocks listed on The Nasdaq Stock Market.
The S&P 500® is widely regarded as the best single gauge of large–cap U.S. equities.
Token Definitions
Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer–to–peer bitcoin network without the need for intermediaries.
Ethereum (ETH) is a decentralized, open–source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
Decred (DCR) is a cryptocurrency that uses two consensus mechanisms, proof–of–work and proof–of–stake. It was created to address the problems some believe are inherent to these consensus algorithms and redirect the centralization cryptocurrency has experienced.
Ergo (ERG) is a programmable blockchain that uses advanced technological features to design decentralized apps (dApps). According to the whitepaper, Ergo’s goal is to make financial contracts more efficient, safe, and simple to implement.
Secret (SCRT) is a privacy–oriented blockchain built on Cosmos.
Tornado Cash (TORN) Tornado Cash aims to solve a number of the privacy and anonymity issues in the crypto world, particularly surrounding traceability of transactions.
Cosmos (ATOM) is a cryptocurrency that powers an ecosystem of blockchains designed to scale and interoperate with each other.
EOS (EOS) is an open–source blockchain platform that prioritizes high performance, flexibility, security, and developer experience.
Flow (FLOW) is a fast, decentralized, and developer–friendly blockchain, designed as the foundation for a new generation of games, apps, and the digital assets that power them.
NEAR Protocol (NEAR) is a decentralized development platform that uses a Proof–of–Stake (PoS) consensus mechanism and will eventually feature a sharded architecture to scale transaction throughput.
Uniswap (UNI) is a popular decentralized trading protocol, known for its role in facilitating automated trading of decentralized finance (DeFi) tokens.
Maker (MKR) is the governance token of the MakerDAO and Maker Protocol — respectively a decentralized organization and a software platform, both based on the Ethereum blockchain — that allows users to issue and manage the DAI stablecoin.
Agoric (BLD) is a smart contract platform built on the Cosmos SDK that uses Tendermint Proof–of–Stake (PoS) and a native token to secure the network. The Agoric chain enables developers to create decentralized applications (dApps) using composable JavaScript smart contracts.
Internet Computer (ICP) is the world’s first blockchain that runs at web speed and serves content on the web, with unbounded capacity.
Waves (WAVES) is a public blockchain network that enables users to create and access decentralized applications. It features on–chain governance, Formal Verification for smart contracts, and a variation of Proof–of–Stake ((PoS)) called Leased PoS to ensure network consensus.
Solana (SOL) is a public blockchain platform. It is open–source and decentralized, with consensus achieved using proof of stake and proof of history. Its internal cryptocurrency is SOL.
Chiliz (CHZ) is a digital currency for sports and entertainment, powering the world’s first blockchain–based fan engagement & rewards platform Socios.com.
Ronin (RON) Ronin is an Ethereum sidechain built specifically for gaming. Ronin is operated by validators which are appointed by Sky Mavis, the core developers of Axie Infinity.
Gala (GALA) is a play–to–earn game development company building a robust gaming ecosystem that leverages the power of blockchain technology to empower its users.
Basic Attention Token (BAT) is a blockchain–based digital advertising and rewards platform powered by BAT, an ERC–20 token, and Brave, a new internet browser.
Axie Infinity (AXS) is a “play–to–earn” pet training game and virtual world built on the Ethereum blockchain.
Decentraland (MANA) is building a decentralized, blockchain–based virtual world for users to create, experience and monetize content and applications.
The Sandbox (SAND) is a virtual world where players can build, own, and monetize their gaming experiences using non–fungible tokens (NFTs) and $SAND, the platform’s utility token.
Kyber Network (KNC) is an Ethereum based decentralized exchange focused on rapid onchain execution of transactions.
Avalanche (AVAX) is an open–source platform for launching decentralized finance applications and enterprise blockchain deployments in one interoperable, scalable ecosystem.
GMX (GMX) is a decentralized spot– and perpetual–trading crypto exchange which offers low swap fees and zero price impact trades.
dYdX (DYDX) is a decentralized exchange built on the Ethereum network delivering key financial instruments to users such as perpetuals, margin and spot trading, as well as lending and borrowing.
Frax (FRAX) is a fractional–algorithmic stablecoin protocol that uses both collateralization and algorithmic processes to create its decentralized stablecoin, FRAX.
Tether (USDT) is a stablecoin (stable–value cryptocurrency) that mirrors the price of the U.S. dollar, issued by a Hong Kong–based company Tether.
USD Coin (USDC) is a stablecoin that is pegged to the U.S. dollar on a 1:1 basis.
Dai (DAI) is an Ethereum–based stablecoin (stable–price cryptocurrency) whose issuance and development is managed by the Maker Protocol and the MakerDAO decentralized autonomous organization.
PancakeSwap (CAKE) is an automated market maker (AMM) — a decentralized finance (DeFi) application that allows users to exchange tokens, providing liquidity via farming and earning fees in return.
Aave (AAVE) is an open–source and non–custodial protocol to earn interest on deposits and borrow assets with a variable or stable interest rate.
THORchain (RUNE) is an independent blockchain built using the Cosmos SDK that will serve as a cross–chain decentralized exchange (DEX).
FTX Token (FTT) is the native token designed for the cryptocurrency derivatives exchange FTX. It has numerous uses designed to benefit its users and increase network effects around the platform.
Huobi Token (HT) is an ecosystem token launched by Huobi Global, offering benefits such as trading fee and margin discounts and access to certain trading events.
Binance Coin (BNB) is digital asset native to the Binance blockchain and launched by the Binance online exchange.
Kucoin Token (KCS) is a cryptoasset exchange platform aiming to offer low–cost trading for users. Ultimately, the platform plans to transition to a decentralized exchange platform.
OKB (OKB) is the native exchange token of OKEx that provides discounts on trading fees, access to the OK Jumpstart initial exchange offering (IEO) platform, and voting rights for tokens to be listed on the exchange.
Cronos (CRO) is the native cryptocurrency token of Cronos Chain — a decentralized, open–source blockchain developed by the Crypto.com payment, trading and financial services company.
Cardano (ADA) Cardano is an open–source, smart–contract platform that aims to provide multiple features through layered design.
Polkadot (DOT) is a sharded heterogeneous multi–chain architecture which enables external networks as well as customized layer one “parachains” to communicate, creating an interconnected internet of blockchains.
Tron (TRX) is a multi–purpose smart contract platform that enables the creation and deployment of decentralized applications.
Polygon (MATIC) is the first well–structured, easy–to–use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications.
Tezos (XTZ) is a decentralized, open–source proof of stake blockchain network that can execute peer–to–peer transactions and serve as a platform for deploying smart contracts.
Elrond (EGLD) is a blockchain protocol that seeks to offer extremely fast transaction speeds by using sharding.
The Graph (GRT) is a protocol for indexing and querying data from blockchains, starting with Ethereum.
Celo (CELO) is a blockchain ecosystem focused on increasing cryptocurrency adoption among smartphone users.
Lido DAO (LDO) is a liquid staking solution for Ethereum and other proof of stake chains. This allows users to stake their tokens without having to lock assets or maintain staking infrastructure.
An investment in the strategy is subject to risks which include, among others, regulatory, general investment and trading, opaque spot market, digital assets, digital asset exchanges, investing through DEXes, stablecoin, OTC transactions, valuation and liquidity, cryptocurrencies lending, digital asset lending and borrowing, DeFi lending of digital assets, digital asset lending programs offered by certain CeFi and DeFi exchanges, rebasing of digital assets, credit, credit market illiquidity, third party wallet providers, loss of private key, volatility and speculative nature of digital assets trading, digital asset network protocols and software, digital asset network malicious actors, forks and airdrops, digital asset miners ceasing operations, cybersecurity, computer malware and viruses, data loss, incorrect transfer of digital assets, initial coin/pre–sale initial coin offering, synthetic investments, options, futures, forwards, lack of blockchain company operating history, blockchain company failure, short selling, leverage, limited diversification, non–U.S. securities, and counterparty risks.
The views and opinions expressed are those of VanEck. Fund manager commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. Any discussion of specific securities mentioned in the commentaries is neither an offer to sell nor a solicitation to buy these securities.
Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency may be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.
Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.
Investors should conduct extensive research into the legitimacy of each individual cryptocurrency, including its platform, before investing. The features, functions, characteristics, operation, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or evaluate. The cryptocurrency may be vulnerable to attacks on the security, integrity or operation, including attacks using computing power sufficient to overwhelm the normal operation of the cryptocurrency’s blockchain or other underlying technology. Some cryptocurrency transactions will be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that a transaction may have been initiated.
- Investors must have the financial ability, sophistication and willingness to bear the risks of an investment and a potential total loss of their entire investment in cryptocurrency.
- An investment in cryptocurrency is not suitable or desirable for all investors.
- Cryptocurrency has limited operating history or performance.
- Fees and expenses associated with a cryptocurrency investment may be substantial.
VANECK ABSOLUTE RETURN ADVISERS CORPORATION (‘VEARA”), IS A MEMBER OF NFA AND IS SUBJECT TO NFA’S REGULATORY OVERSIGHT AND EXAMINATIONS. VEARA HAS ENGAGED OR MAY ENGAGE IN UNDERLYING OR SPOT VIRTUAL CURRENCY TRANSACTIONS. ALTHOUGH NFA HAS JURISDICTION OVER VEARA, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY FOR UNDERLYING OR SPOT MARKET VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS. YOU SHOULD ALSO BE AWARE THAT GIVEN CERTAIN MATERIAL CHARACTERISTICS OF THESE PRODUCTS, INCLUDING LACK OF A CENTRALIZED PRICING SOURCE AND THE OPAQUE NATURE OF THE VIRTUAL CURRENCY MARKET, THERE CURRENTLY IS NO SOUND OR ACCEPTABLE PRACTICE FOR NFA TO ADEQUATELY VERIFY THE OWNERSHIP AND CONTROL OF A VIRTUAL CURRENCY OR THE VALUATION ATTRIBUTED TO A VIRTUAL CURRENCY BY VEARA.
There may be risks posed by the lack of regulation for cryptocurrencies and any future regulatory developments could affect the viability and expansion of the use of cryptocurrencies. Investors should conduct extensive research before investing in cryptocurrencies.
Information provided by Van Eck is not intended to be, nor should it be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.
NFTs are not an investment. Rather, NFTs are digital memorabilia intended solely for entertainment purposes. As entertainment memorabilia given to you as a gift, NFTs have no value and are not intended by VanEck to ever have any value. Neither VanEck nor anyone else will take or not take any current or future action that is designed in any way to maintain the value of the NFTs, or to cause their value to grow or increase. You must not attempt to obtain an NFT from VanEck if you view it as an investment.
The information, views and opinions herein are those of the author(s), but not necessarily those of VanEck or its employees.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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