In the first two months of year 2019, the crypto market has witnessed a slightly bullish trend…until the night of February 24th. The cynical guess of what happened then, is conveniently paralleled with the news of softening Sino-US trade spat triggered sell-off of cryptos to pour funds into equity market — China A rallied over 5% the next day.
In the hectic crypto market, above is just one small anecdote that sheds light on the media-driven fluctuations associated with high volatility, arguably excessively reliant on speculations and idiosyncratic events.
So, the big question is — how shall we look into this market? Our view is that in the short term, the market is naturally positioned to generate and ride along hypes; and in the longer term, fundamentals take the driving seat. We see that Binance Launchpad resumed with two new projects, BitTorrent and Fetch.AI. Setting aside the valuation of these specific projects, the rally of BTT was expected given the prowess of Binance and Tron. We see that both Cosmos and IrisNet are launching their mainnets. As such, will other related “inter-chain” tokens gain friction in the next quarter?
In the longer term, there are some events more certain to come. In April or May next year, Bitcoin will halve the reward (which is potentially positive for BTC performance) and the market could very possibly be proactive in welcoming this. Also, another interchain giant Polkadot, more “world computers” (Dfinity and Nervos), and IPFS (having some technical challenges?) will potentially have some major announcements in the foreseeable future.
At the same time, JP Morgan just announced the launch of JPM Coin and Facebook is said to launch a stable coin as well. We are at a critical moment when serious incumbents in the real world start to step into the “blockchain+token” world, though in a more fenced way. Infrastructure-wise, despite numerous delays, Bakkt and Crypto ETFs are steadily making progress and may see milestone events within year 2019.
As part of Wanxiang Blockchain ecosystem, we and/or our brother companies did invest in some of the above-mentioned projects, such as Nervos, IrisNet and so on…
Axonomy has been focusing on activation and commercialization of distributed business. Due to the tech-driven nature of the industry, infrastructure such as public chains has been focusing on technology rather than utilization. DAPPs are to users, but there aren’t many successful cases so far with large and active user base. On the other hand, individual crypto adopters are eager to invest in credible projects and at the same time are ready to have trials on interesting DAPPS. Here we are, by building up this Axonomy platform so that all can collaborate to make the business flow.
Nevertheless, in the many niches of DAPPs, many are still in their primitive stage. We believe that financial services and gaming are the two niches better fit with blockchain given that data are native.
In financial services, the development of stable coin has profound impact to the future of this industry. It started from acting as a parking place for traders in-between trades, and now gradually steps into payment, lending, and more. We could reasonably expect stable coin to take two important roles. One is to facilitate more usage of DAPPs by users as low volatility media of exchange; the other is to link with more real-world applications. The market is huge, for example, stable coin could potentially facilitate arbitrage on funding cost on global scale. Of course, there are many challenges to face, such as how to assess risk, how to comply with laws and rules under different jurisdictions, etc. We invested in some crypto lending project and are eagerly looking into future investment opportunities in this space.
In financial services, STO has been a buzzword for quite a while. Many discussions focus on technical/legal part of the story, things like EIP standard, US SEC Reg D/S/A+ or whatsoever. These are surely important, but in my view, the most critical factor for the success of this market is its positioning. What kind of projects? What kind of assets (traditional? Intangible? blockchain?)? why will serious capital buy into such assets? … We bought into one Swiss STO platform and our brother company bought into a US player to prepare for future layout.
Blockchain Gaming is one of the few spaces where business has meaningful revenue. The difference of blockchain gaming and traditional gaming is that the former is more about profit (both low-risk income and high-risk wager return) while the latter is more about having fun. In this sense, blockchain gaming is 70% financial in nature and 30% pure gaming in nature, at least at this stage. But we start to see some very fun games, outstanding teams and brilliant business models. This is why we invested in MixMarvel, a blockchain gaming layer 2 protocol, and TonArts, a blockchain game producer.
All in all, at Axonomy, we are true believers of the long-term prospect of blockchain, tokenonmy, and distributed business. Naturally, we invested in some service provider for this industry, for example, Bit-Data, whose ambition is to become Bloomberg of crypto space.
As illustrated, Axonomy is a community driven accelerator for distributed business. Apart from investing in various projects, we conduct activities to both help the community for investment education and help the projects for better publicity as well as user adoption. In February, we had a successful round of voting for best digital wallets from our community by using our community token Axon. During the 10-day event, Axonomy platform has received over 7000 user-generated reviews with over 3000 participants globally.
