NFTs: the world is changing without asking for permission
Once again, technology begins to shift the balance of power we are accustomed to. Supports are protecting Bitcoin and Ethereum
“A tax dollar paid today is far more expensive than one paid in future dollars. With inflation, money becomes less valuable over time because of the cost of goods increases.”
Coreen T. Sol
Not a day goes by without someone writing or talking about NFTs (Non Fungible Tokens). This is also the hottest topic in the rooms on ClubHouse. As I have written before, in contrast to what has happened so far with Bitcoin and cryptocurrencies, it is not the usual technology experts who are discussing this topic, but rather people who are totally new to the world of bytes and bits, but who have discovered new possibilities with the use of cryptocurrencies and who are able to go beyond the territory that was hitherto partly confined mainly to nerds.
Early adopters of bitcoin were cryptographers, libertarians or anyone who could move easily through the maze of technology. The difficulty for many to understand the real value of bitcoin (or other cryptocurrencies), was not always in line with the idea of speculation. Social pages or groups dedicated to cryptocurrency trading are far more popular than those where technology developments are discussed.
This is not necessarily a bad thing. The reasons why NFTs are exploding in popularity, to the extent that searches on googletrends have spiked, are not due to a sudden collective madness. Knowing that a digital file or image can continue to be reproduced with the same characteristics as the original, and that tomorrow doing so will mean paying a commission, is surely the beginning of a change that will alter the digital world as we have known it in recent years.
These days there is a lot of discussion about NFTs associated with digital art, less so with collecting, even though the volume of turnover is higher (see tables below for the NFT section). Gaming, e-sports and virtual or augmented reality are also attracting the attention of enthusiasts with interesting numbers. There is plenty of room to grow.
The era of tokenization, often discussed among experts in the field, seems to have begun. Today, a digital certificate of ownership can be exchanged in real-time with another, or sold, on the other side of the world without an intermediary. A code can be associated with the sale, allowing a share of the commission if the new owner decides to resell the digital file. And this file could be an image, a song or a simple document. In the future in which we already partly live, it will be possible to apply it to all financial sectors, to real estate, to communication. Intellectual property will be better protected because the control of the digital chain will simplify the steps. In the age of social media, it is often impossible to trace the real source of a piece of news.
The first NFTs came into being in 2017 and, except for those in the industry, few people knew about them until yesterday. This possibility did not exist before. Today's euphoria focuses attention on speculation while leaving out the opportunities that show up in front of us. All kinds of resources will be tokenized. What we do know for sure is that the world is changing, and this time without asking permission.
Decentralized Finance
Trading volumes on DEXs (decentralized exchanges) have increased slightly (+6%) over the past seven days to around $12.4 billion. Despite the fact that fees are not decreasing, Uniswap remains the undisputed leader with 60% of the market share, despite having a total of over $7.2 billion and an average daily trading volume of just under $1 billion. Further on, there is an in-depth look at the update to the V3 version announced by the Uniswap team.
SushiSwap, although with lower volumes, keeps up the pace by increasing its trading volume from last week's total by more than $300 million to over $2 billion and an average daily trade of about $300 million.
The price fluctuations of recent days have not spared the tokens linked to the various DeFi projects. Of the top 10 most capitalized exchanges on a weekly basis, the balance is negative, except for THORChain (+1.6%) and PancakeSwap, which has gained 50%. PancakeSwap is the third-largest decentralized exchange in terms of turnover, linked to the Binance Smart Chain, and is an alternative to the more prestigious Uniswap, offering higher execution speed and lower fees.
The slowdown in the growth of tokens locked in the various decentralized finance projects has not dampened the volume of business, which has remained above $41 billion. More than 9 million ETH tokens have been chosen by users to lock into decentralized protocols. This is the highest peak of the last five months. In contrast, the number of bitcoin tokenized on the ERC20 protocol is different, with just over 30k BTC, the lowest number since the beginning of January.
Uniswap, the leading decentralised exchange (DEX) on Ethereum, the centrepiece of the decentralized finance (DeFi) industry with $42 billion in volumes last month, is releasing its third update. In a blog post on Tuesday, the company behind the platform said its goal is to make Uniswap "the most flexible and efficient [automated market maker] ever designed". AMMs - once almost exclusively the domain of Uniswap - have now grown in stature along with the overpowering emergence of DeFi last year. Rivals like SushiSwap, 1inch and others have also made it easy for many crypto natives to exchange Ethereum-based assets. Uniswap v3 is expected to launch on the mainnet on May 5th, the company wrote. In particular, Uniswap is planning an integration "soon after" with the Ethereum Optimism throughput enhancer.
Uniswap is a DeFi (decentralized finance) protocol created by Hayden Adams on the Ethereum blockchain, with the aim of enabling the exchange between Ethereum and ERC-20 token cryptocurrencies on the Ethereum blockchain. The protocol has completely revolutionized the way cryptocurrencies are traded using liquidity pools. Liquidity pools are pools of ETH tokens that remain locked inside smart contracts for a certain period of time and are mainly used to facilitate trading on DEXs (decentralized exchanges). Decentralized exchanges, in order to improve the performance of their order books, which are always very illiquid, slow and expensive due to the lack of market makers, need liquidity pools to bring liquidity directly to the exchange. Any user can now swap Ethereum or ERC-20 tokens or become a liquidity provider on decentralized exchanges. This is akin to liquidity providers directly replacing market makers, offering liquidity directly to the DEX and receiving a share of the fees when a transaction is completed. Liquidity pools thus provide a channel to bring immediate liquidity to the decentralized exchange, which can now improve transaction performance in exchange for interest received in tokens. The development of this technology is moving quickly and steadily so as to be able to offer innovative products and better results to users. Uniswap is also the name of the company that initially built the protocol and as of October 2020, it has become the world's largest decentralized exchange. Developed on fully decentralized blockchain networks, running open-source software on Ethereum nodes it immediately stood in contrast to any centralized intermediaries (Coinbase, Binance and OKEx). However, at this time the Ethereum blockchain is going through a very difficult and complex phase due to the raising of gas and gwei fees. This has led to a congestion of transactions over the last few months, which in order to be carried out, require very high fees, which in turn are inconvenient for users.
As the largest consumer of Gas and Gwei on the crypto market at the moment, Uniswap has practically eaten up millions of dollars in fees in recent months. The long-awaited official launch of Uniswap v3 is finally here and this will happen on May 5th, 2021 and with it, the main innovations will include:
Concentrated Liquidity, which gives individual Liquidity Pools control over price ranges. Aggregation of individual positions into a single pool, forming a combined curve that users can trade against.
Multiple fee levels, allowing Liquidity Pools to be adequately compensated for taking on varying degrees of risk. These improvements in Uniswap V3 specifically indicate that a small lowering of the level of fees may be achieved, but will not be fully finalized prior to the development of Layer 2, thus creating dissatisfaction among supporters who expected a decrease in gas and gwei transaction costs. Uniswap also states that there will be flexible fee levels for risk compensation when providing liquidity in the pools, but that no significant reduction in Ethereum blockchain fees can be expected for now: Even with these revolutionary design improvements, the gas cost of v3 swaps on the Ethereum mainnet will be slightly lower than v2 with a consequent reduction in the price of transactions made on the Optimism distribution. Despite huge development in a matter of months, however, Uniswap has crushed the community's hopes in proposing major improvements in the cost and transaction speed of the Ethereum blockchain. According to a March 22nd report by Coin Metrics, the problem stems from the fact that Ethereum blocks are over 95% full. This means that miners are prioritizing higher gas transactions as each block can only carry a limited amount of ETH. The provider of this analysis added that this problem is unlikely to be solved and that only a true scaling of the blockchain will help reduce the crisis of fees and the actual cost of transactions. The development of Uni v3 will solve many problems and ensure that the performance of the protocol and the decentralized network will be greatly improved. But for the time being, users of the Ethereum blockchain will still have to wait for a solution to the gas and gwei fees, which peaked in price at the same time as the price of ETH was soaring, and which will still lead to dissatisfaction among the community due to their high costs, rendering cutting-edge DeFi technology products like Uniswap unusable.
5 hottest DeFi news of the week
Technical Analysis
Bitcoin (BTC)
despite the difficulties of the last few days showing a period of weakness in the short term, the medium to long term trend remains set to the upside. A weekly close below 55,000 USD (1) marks the second consecutive negative weekly close since the beginning of the year. From the absolute highs reached on March 13th at 61,700 USD (2) to the current values, the total loss does not exceed 10%. If we consider the rise that has seen the price of bitcoin exceed 90% of its performance since the beginning of the year, the current movement can be classified as a retracement and not a decline.
The recovery of 55,000 USD in the last few hours brought the price back to test the former dynamic support that accompanied the price rise by joining the rising lows of the last two months. A strengthening of the climb and pushing prices above 58,000 USD (3) in the coming days of the week will provide a clear bullish signal reinforcing the hypothesis of the beginning of a new monthly cycle. Conversely, with the failure to consolidate above 54,000 (1) USD for at least three consecutive days, the short-term trend will continue to show signs of weakness increasing the risks even in the medium term. A fall below 50,000 USD (4) opens up downward spaces up to the 44,000 USD area, which coincides with 50% of the Fibonacci retracement referred to the lows and highs of 2021, as well as with the lows of the previous bearish lunge at the end of February.
BTC Options
With the quarterly expiration of Bitcoin options over $6 billion, the highest amount ever, risk hedging strategies continue to protect the resistance above 57,500 USD, slightly down from last week's highs in the 61,000 USD area. On the downside, the first defences move from 54,000 USD to 52,000 USD, a level that coincides with the daily close of March 25th, the lowest level since the first week of the month.
Watch out, the loss of this last level could cause volatility to increase and speculation to the downside.
Ethereum (ETH)
Support levels have held up very well in this phase where short-term weakness is prevalent. In the last 48 hours, the test of the support of 1,600 USD (1) has brought back the purchases making the price bounce back to the 1,700 USD area (2) , an area where 25% of the Fibonacci retracement passes, calculated with the lows and highs from the beginning of the year. Technically, the trend remains set to the upside both in the short and medium-long term. Only a descent below 1,500 USD would give rise to fears of a change in trend, which should be assessed carefully. The only danger is a drop below 1,300 USD(3) , the low of the end of February. In order to resume the upward trend and have signals confirming the start of the new monthly cycle, it is necessary to exceed 1,900 USD with the support of volumes.
ETH Options
Hedges are increasing to protect against the risk of any upside. Traders point to the 1850-1900 USD area as the first level to be broken in order to start the new monthly cycle that will most likely mark new absolute highs. The hedging of the downward positions flattened out, highlighting the risk of wide downward areas down to 1,300-1350 USD, a level that coincides with the lows of late February and the previous highs of January.
New geographical NFTs to be released next week on Pteria DAO
Geographical NFTs to be released on Pteria DAO
A few days ago, the Pteria launched on the Aragon platform dedicated its Decentralized Autonomous Organization (DAO) a voting event to understand the interest of its user regarding a new revolutionary type of NFT, non fungible token.
In fact, the proposal was to create new Non-Fungible Tokens (NFTs) representing specific geographical areas (UK, Greece, Turkey, Italy, United States, etc...).
This idea was greatly appreciated by the users, so the "YES" won, and the Pteria DAO promised to launch these new NFTs next week, on Monday 29th (March, 2021).
Basically, the owners of these new NFTs related to a specific territory will receive a fee (percentage to be defined) of all revenues from the game application called Wallem according to where players are participating in events in a specific geographical area.
Wallem is a mobile application, available for both Android and iOS. Similar to Pokemon Go, the app allows users to join events and capture cryptocurrencies or different products. In the past, in fact, people had the chance to obtain Armani Exchange watches, iPhones, Amazon discounts and different cryptocurrencies like PieDAO and pTokens.
These new NFTs will be launched on the Pteria official marketplace on Opensea.io, where the company also published other NFTs related to the several skins present in the app, such as PewDiePie and PugDog. The owners of these NFTs receive fees according to the usage of the corresponding avatar in the game.