It finally happened.
After such a long bullish run in the wider economic markets, a sell-off has been created. The economy has been booming for over 12 years now and skeptical investors have been wondering whatever happened to the good old traditional 7-year boom/bust market cycles?
Well, it seems that the Coronavirus has managed to shake up the sentiment for the world economy and has sent it tumbling down. Over the past 3 weeks, we have seen a large sell-off in pretty much every stock market within the world. The S&P 500, an index that tracks the top 500 US companies, dropped by an extraordinary 29% in just 28 days! It dropped from a high of around $3,400 to the current trading price at around $2,400 and it does not seem to be slowing down in the slightest.
The uncertainty of the Coronavirus pandemic has created fear within the market causing investors to sell their assets as a “risk-on” scenario is birthed. During a period of “risk-on” investors tend to want to hold cash as it literally becomes king. Even assets that are considered to be “safe havens” are tumbling - just take a look at Gold (down 12% from 2020 highs), Silver (down 36% from 2020 highs), and Bitcoin (down 50% from 2020 highs)
This article is largely focused on smaller projects that I think are most likely to survive in this on-going market crash. The large scale projects such as Bitcoin and Ethereum are solid contenders to survive - that goes without saying.
1. Binance Coin
If you’ve ever been in a casino you are most likely to know the famous phrase “the house always wins”. This statement is extremely applicable to exchange tokens and Binance Coin is the king of them all.
In the case of Binance Coin, it is the volume on the exchange that really matters the most. This is because traders will always need a place to execute trades regardless of which direction the market may be heading and, as they continue to trade, the exchange continues to make money that is generated from the fees. This is why Binance Coin will always be a golden option and is my number 1 pick to likely survive this market-wide capitulation.
You can see this effect in action during 2019. Whilst the entire market was experiencing “the crypto winter” Binance Coin was going on a rampage as it continued to grow throughout the year. It began the year at a price of around $5.50 and by the time June came around it had increased by a total of 600% to reach $38. Just take a look at the chart below;
You can see that whilst the majority of the market was experiencing a depressing start to 2019, Binance Coin was going on a rampage as the smart money started to enter the market. People knew that putting their Dollars into one of the few cryptocurrency companies that is actually making money was probably the wisest thing to do.
On top of this, the entire Binance ecosystem itself is also growing month-on-month as they continue to add new features to solidify its role within the industry. In fact, it is growing at such an extreme rate that even the CEO can’t even seem to keep up with the progress;
Decentralized Finance (DeFi) is now in a position where it pretty much can not be stopped and it will only continue to grow from here. The majority of DeFi services are related to financial solutions for particular things. When it comes to DeFi solutions, the decentralized oracle Chainlink will play an extremely critical role in the entire ecosystem. It will be used to keep prices quoted within the financial solutions in check and will help to prevent markets from crashing.
For example, Chainlink could have easily prevented the recent DeFi hack which saw a total close to $1 million being taken through the use of the bZx DeFi service on two separate occasions.
The Valentine’s Day Theft
On the first hack, the attacker took out a 10,000 ETH flash loan on the dYdX DeFi platform. He then sent 5,500 ETH to Compound to allow him to collateralize a 112 wBTC (wrapped-BTC) loan on the platform.
Another 1,300 ETH was then sent to bZx Fulcrum platform in which he shorted ETH/BTC at 5x leverage. 5,600 ETH was borrowed on Kyber’s DeFi service and this was swapped for 51 wBTC which caused large slippage.
The slippage allowed the attacker to profit from the 112 wBTC borrowed on Compound when he converted it back to ETH. He also profited from his short position on bZx which should not have been able to have been opened in the first place. In total, he managed to profit around $300,000 after repaying the original flash loan.
The funny (or ironic) thing about this attack is that it occurred on Valentine’s day when the bZx team was scheduled to conduct a talk on their platform at ETHDenver.
The Oracle Manipulation Attack
The second hack is where the implementation of Chainlink would have really prevented the attack from being successful. The attacker took out another 7,500 ETH flash loan and sent it to the Synthetix platform to buy sUSD (a USD stablecoin) at $1 per coin. He then sent this sUSD to bZx to be used as collateral later.
The attacker then used around 900 ETH to buy sUSD on Kyber and UniSwap which caused the price for sUSD to increase past $1 as it headed toward $2. This now meant that the attacker could take out a much larger loan on bZx because his sUSD collateral seemed much higher. In total, he managed to make around $600,000 in this second attack as profit.
If Chainlink was implemented into bZx at the time, the price for sUSD would not have been read from one pricing source and, instead, the decentralized oracle would have sourced the price from many different feeds. This would have resulted in the attacker not being able to take out such a large loan from the collateral that he had.
It seems bZx are aware of how Chainlink could have prevented this attack and have now implemented it into their service.
As DeFi continues to grow, Chainlink will be the ‘go-to’ solution for decentralized pricing and oracle services and therefore is likely to come out of this market wreckage unscathed.
3. Basic Attention Token
Basic Attention Token is a cryptocurrency that cannot be ignored these days. Despite the fact that it is not even a top 20 cryptocurrency, it is probably the cryptocurrency that has the greatest exposure and biggest audience. You only need to take a look at the parabolic user growth that Brave Browser has seen over the past few months;
The Basic Attention Token is embedded into the Brave Browser’s ecosystem and is seen by its millions of users each and every day. Furthermore, people are being rewarded in BAT to view adverts that pop up whilst using the browser itself.
One of the greatest things about this project is probably the leader behind the wheel, Brendan Eich.
Additionally, if you were to look at the price chart for BAT you will notice that the price for the coin has never really undergone any major “pump and dumps” which is usually a very strong sign for potential investors;
Taking all this into consideration, BAT is highly likely to survive this cryptocurrency wipeout and come back stronger than ever.
Going back to DeFi solutions, the question about if decentralized exchanges will become the main method of trading has pretty much already been answered - if you are wondering, yes, it is bound to happen. Traders need a way of being able to execute trades without having to send their funds to a 3rd party exchange and hoping they don’t get hacked. This is why decentralized exchanges will be important.
The question is now only about ‘when’ will it actually happen?
The technology that is setting the foundation for the future of decentralized exchanges (DEX’s) is already in progress and Loopring is considered as one of the pioneers in this industry.
One of the most annoying things about trading on centralized exchanges is the fact that the trading fees always seem to add up. Well, the solution that Loopring has created means that traders will now only need to pay a small $0.000124 fee per trade! This is SIGNIFICANTLY cheaper than centralized exchange fees. However, it is important to recognize that this is the fee applicable at the protocol level and different DEX's/relayers can charge whatever price they would like but we can still be sure that it sill be much cheaper than maker/taker fees on centralized exchanges.
Another great thing about Loopring is that it is designed to be able to handle up to 160,000 traders per second which is certainly more than enough to make it a viable solution for everybody to trade with. Currently, it can only handle 2,000 trades per second, however, once Ethereum upgrades to ETH 2.0, this figure will increase toward the quoted 160,000 trades per second.
Also, the fact that all trades on Loopring occur on-chain make it 100% safe for users to trade using their decentralized exchanges. Furthermore, it is important to point out that Loopring is a protocol and not a decentralized exchange in itself. This means that if one Loopring DEX goes down, there are still many other options for traders to trade from. But the most important thing is that if a DEX goes down, your funds are not locked into that one exchange as you always retain custody of your own cryptocurrency.
Once the dust has settled, I believe Loopring will remain one of the strongest DEX solutions for the entire cryptocurrency industry.
We all know that the main reason that many people get involved in cryptocurrency is for the big gains and the potential money to be made. However, the second biggest reason that people get into crypto is a combination of privacy and distrust in their government. Well, Monero offers a solution to both of these problems.
Initially, we all thought that Bitcoin was an anonymous cryptocurrency. However, this is not true as all Bitcoin transactions can easily be tracked - making the cryptocurrency only pseudo-anonymous. Well, once privacy starts to become a real issue in the industry we will see a large proportion of users swapping their Bitcoin (and other cryptocurrencies) into privacy coins such as Monero as they strive for privacy.
Through a group of privacy technologies such as Ring Signatures and Zk-SNARKS, Monero is completely anonymous cryptocurrency. This means that you can conduct transactions on the network without anybody knowing who is sending what and how much is being sent.
Along with being anonymous, Monero is also fungible. This means that 1 XMR can easily be swapped for another XMR. Initially, this might not make much sense, however, when you realize that people would prefer to not have ‘dirty’ Bitcoins that have been used for illicit activities you understand that Bitcoin is NOT fungible. Monero is fungible due to its privacy and therefore you can easily swap 1 XMR for another without any problems.
On top of all of this, Monero is also scalable and ASIC resistant which ensures a secure and robust ecosystem.
Once we move past this cryptocurrency collapse, Monero is likely to be the strongest privacy coin that is left standing.