Token Sales Evolution and How it Will Affect Us

  • Cryptocurrency Analysis

The year 2021 presents the world with new opportunities that can significantly expand the crypto ecosystem. The ten-year evolution of token distribution models has reached an astonishing pace of development. Bitcoins alone are currently mined about 18.7 million, which means 89% of BTC is in general circulation and the predicted mining year for all bitcoins is 2140.

Today, crypto tokens are represented on various blockchains. Most of those in the TOP 100 by market cap is on Ethereum . This list includes stablecoins, Defi projects, and decentralized exchange tokens. The total volume of stablecoins as of April 24, 2021, is $127.13 billion. The price of Ethereum is $2186.27.

The emerging cryptocurrency capital market has acquired a powerful network effect and high liquidity, capturing the attention of a huge number of investors, at first small, but at the moment - large investment companies and institutional organizations. With the unquenchable enthusiasm associated with ICO, IEO, Defi and other models, the investment community plunged into the excitement of NFT, a non-fungible token. NFTs, usually digital assets and acting as a type of collection, already constitute a market of more than $ 1 billion, which has been joined by a wide variety of famous personalities and representatives of the art industry – such as Paris Hilton, Lindsay Lohan, Rob Gronkowski, Patrick Mahomes, The Kings of Leon, DJ Steve Aoki, rapper Ja Rule, Shawn Mendes, Mark Cuban, Grimes, Jack Dorsey and many more.

Tokens in all their forms have substantially changed global capital markets and democratized investment opportunities with high returns. As the bullish trends of 2021 stimulate the cryptocurrency market, cryptocurrency capital has begun to find more new uses.

We may be seeing the effect of the intelligent community clearly realized that time is critical to success, and now, copying the style of innovators like Elon Musk, invests more confidently in cutting edge assets before last ones hit the big market. In addition, it is worth noting the trend that institutional investors around the world are consistently decreasing their dependence on the dollar and increasing their shares in these assets.

Tokens are here to stay

Apparently, sceptics predicting the death of a token may be wrong too. The crypto market has become, as they say, "Too big to fail". Deutsche Bank (DE: DBKGn )'s March Future of Payments report states " Bitcoin 's $ 1 trillion market capitalization makes it too important to ignore." In this regard, it will be useful to analyse the main milestones in the development of this fascinating world (see Pic. 1)

Innovations in token models have accelerated significantly since last year, from steak drops for projects like Oasis and NuCypher to community sales for Near and Flow.

The Oasis Project is a scalable privacy-enabled blockchain built for Decentralized Finance (DeFi) and a Responsible User-Owned Data Economy. Between 2018 and 2020, Oasis raised over $ 45 million from various investors, including WinklevossCapital.
 
NuCypher is a platform offering security and encryption services for distributed systems. The project raised $ 10 million in 2019, including investments from traditional venture capitalists such as Y Combinator, Fenbushi Capital, Compound VC, Notation Capital, DHVC, and Hack VC.

One of the most anticipated technologies of 2020 from a team with Russian roots is Near, an open-source platform designed to accelerate the development of decentralized applications. In July 2019, the Near team raised over $ 12 million to open the beta program, with Metastable and Comeplice as key investors.

Blockchain Flow from Dapper Labs in August 2020, the project raised $ 12 million from several well-known investors, including NBA players Spencer Dinwiddie and Andre Tyler Iguodala, Samsung (KS: 005930 ), Coinbase and others. Designed to scale without segmentation, Flow should significantly improve speed and throughput while maintaining a developer-friendly and ACID-compliant environment.

However, many founders, especially in the DeFi sector, have decided to bypass the token sale entirely by experimenting with a new class of distribution models.

To increase the liquidity of the network, most of the token distribution mechanisms in DeFi have ceased to include a fundraising component, distributing tokens to users. This is what Satoshi Nakamoto did with Bitcoin mining.
A striking example of this is the Compound team, which has launched several DeFi projects with the distribution of tokens "right into the hands" (wallets) of users. In this way, the distribution of tokens worth more than $1 billion in 2020 was carried out (to users of Uniswap, 1inch, Compound tokens).

With the growing number of token distribution models and the hype around Polkadot, 2021 promises to provide investors with new possibilities.

Polkadot is a cryptocurrency network specialized to connect specialized blockchains into a single unified network. Polkadot's DOT token has become the eighth largest in terms of market capitalization on April 24, 2021, surpassing BCH, LTC, UNI with around $27.7 billion.

One way or another, all transformations in the forms of tokens, their distribution models are nothing more than an attempt to find an optimal solution to the problem of volatility of cryptocurrencies and make them even more attractive against the fiat currencies, which are so prone to inflation and inconvenient to use, limited by many completely unnecessary structures and terms.

Indeed, one of the hotly debated issues is the dramatic change of cryptocurrency value in a short period of time. The volatility of crypto assets is the biggest challenge facing anyone who decides to increase the liquidity of their company or attract investment to a project using cryptocurrencies.

In my opinion, stable tokens can somehow be a solving solution to this problem. An example in this regard is the case of the cryptocurrency exchange KickEX, which, by using the launch of internal tokens, increases an annual client bonus payment of 1.5 times each year. According to preliminary estimates, in 2021, the launch of the semi-stable KUSD token on KickEX will result in the payment of $2.85 million in customer bonuses. Almost every exchange has such solutions; they really allow to neutralize the negative effects of volatility.

However, there are many ways to determine in advance when a cryptocurrency is overbought and is likely to be corrected. For example, when the volatility for any prices is higher than 120%, we believe that it temporarily and rapidly increases, and when the volatility drops to 100%, we are sure that it will fall.

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