Top 10 Weekly Basics (1/20/23)

1. Bitcoin Daily Asset Addresses

Our thesis: Cryptocurrencies are like companies, and active addresses are like customers, active Facebook users, or active Netflix subscribers.

We can measure the price (black line) relative to active addresses (green line) to see if Bitcoin is currently under or overpriced.

btc 1.17.23
(Courtesy of IntoTheBlock)

Investor acceptance: Active addresses (green line) are down to about 971K. This is surprising given that the price (black line) rose another $4K to $21,000 this week, although traders are taking their time before going into “rally mode”.

The explanations behind Bitcoin’s sudden rise are varied, most notably that interest rate hikes are expected to drop in 2023. Inflation is also cooling, with several large purchases among whales documented in recent weeks.

In any case, even with a significant bounce, bitcoin is nowhere near an all-time high in November 2021, and there are still opportunities for investors to buy low-priced BTC.

2. Ethereum Daily Asset Addresses

do 1.17.23
(Courtesy of IntoTheBlock)

Investor acceptance: Like BTC, Ethereum price (black line) rose and entered the $1,500 range ($200 jump from last week), while active addresses (green line) fell to around 523K.

Ethereum’s next upgrade (called Shanghai) will take place in March, and the community is gearing up fast. The ETH network now boasts 500K validators, popular digital wallet MetaMask (powering our BMJ premium token) has enabled users to buy stakes in Ethereum through platforms such as Rocket Pool and Lido Finance.

3. Top Cryptocurrency “Companies” by Total Revenue

Our thesis: Crypto revenue, like transaction fees, is how the cryptocurrency “business” makes money. Smart investors look for projects that make the most money.

rev 1 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: We offer to buy and hold shares (or tokens) in the biggest income producers of cryptocurrency. The chart above shows the top earners:

  • Ethereum (the best blockchain network)
  • Uniswap (best decentralized exchange)
  • OpenSea (the best NFT market)
  • Lido Finance (best stake service)

OpenSea has been struggling since losing the No. 2 spot on this list a few weeks ago, though it’s getting closer to that position again, with just $17 million separating it from rival Uniswap.

As we noted in Tuesday’s Premium newsletter, this can be attributed to a nearly 40% increase in daily activity over the past month.

4. Top crypto companies by protocol revenue

Protocol revenue is money paid back to token holders or company coffers (paid to liquidity providers as with Uniswap or NFT holders as with OpenSea). You can think of it roughly like a stock dividend.

rev 2 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: Our top four are still Ethereum (#1), OpenSea (#2), dYdX (#3), and PancakeSwap (#4). Little change has been recorded over the past seven days, although PancakeSwap is now dangerously close to falling to 5th place with a lead of just $5 million over rival GMX.

Despite another $1 million drop, Ethereum’s position is still significantly higher than the rest of the firms, and considering all the changes that will take place after the Shanghai update, we believe that ETH will remain the leader for the foreseeable future.

5. Total Value Closed

TVL indicates how much a company is holding or “locked” in its smart contracts. This is roughly equivalent to the deposits held by a bank and may indicate the strength of a cryptocurrency company.

tvl 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: Since rising to No. 1 last week, Lido Finance has maintained its No. 1 position in Total Value Locked and has a $700 million lead over its closest competitor, MakerDAO. The top four includes Aave (#3) and Curve (#4).

As mentioned above, new sting capabilities are now available through Lido for MetaMask users. With activity set to increase as we approach the next ETH update, Lido will likely maintain its new spot in this category for some time.

Meanwhile, Curve and Aave remain neck and neck, with just $200 million separating the two. Could these firms change locations in the coming weeks? Stay tuned to find out.

6. The best cryptocurrencies

Our thesis: Both centralized and decentralized cryptocurrencies are arguably the most important applications in blockchain. Savvy investors are looking for what will be the #1 and #2 stocks over the long term.

stock exchange 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: Despite the big gains, the top four this week are still Uniswap, PancakeSwap, Curve and dYdX. Uniswap has passed $6.5 billion, while PancakeSwap could still lose its #2 position, as it now only has a $50 million lead over Curve, and things are close enough that they could switch positions.

As the FTX drama begins to subside, traders are likely to move from centralized to decentralized exchanges. A colorful fool. This may explain the sudden gains recorded for Uniswap. Although trading platforms seem to be making a comeback, it is still recommended to keep at least some of your assets in cold wallets.

7. Best Credit Protocols

Our thesis: Lending and lending is another proven use case of blockchain. Savvy investors are looking for companies that will dominate the long-term credit market.

1.17.23 lend
(Courtesy of Token Terminal)

Investor acceptance: This week sees a change in our top four as drops off the list to be replaced by a platform called Venus. Aave, MakerDAO, and Compound continue to hold the #1, #2, and #3 positions, respectively, and have made strong gains. Aave, for example, recently crossed the $1.2 billion mark.

Venus is a decentralized platform that allows users to borrow and lend cryptocurrencies. The firm operates on its own synthetic stablecoin called VAI, although clients are not limited to this asset and can lend and borrow multiple currencies supported by the firm. Click here for more information.

8. Top layer 1s

Our thesis: The underlying blockchains, also known as L1s, are like operating systems for the Web3. We predict that there will be two or three big winners that will dominate the Internet of tomorrow.

l1 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: Bitcoin is 1st and Ethereum is 2nd. BNB Chain, still in 3rd place, increased its cap to $60 billion. This can be attributed to the recent token burn of over $550 million in BNB units, causing the remaining tokens to further consolidate their value.

In any case, BNB is now much stronger than its competition, and these three networks are likely to remain unchallenged for some time.

9. Best DeFi Protocols

Our thesis: DeFi companies are the future giants of fintech, disrupting or replacing all the legacy payment and banking systems of today.

defi 1.17.23
(Courtesy of Token Terminal)

Investor acceptance: The top three are still Chainlink, Uniswap and BitDAO. As with our previous categories, these institutions posted solid earnings for the week, with Chainlink just shy of $7 billion. Uniswap is over $6.6 billion, while BitDAO is under $5 billion.

BitDAO, the No. 1 contender in this section, could see itself rise up the ranks again given the recent praise it received from The Motley Fool. The publication cites its “unique blockchain” structure and “long-term growth prospects” as game changers for the industry. We’ll be watching BitDAO to see if it really becomes a force to be reckoned with.

10. Best NFT Collections

Our thesis: NFTs are a specialized niche of cryptocurrency. They are only suitable if you really love to collect. Even then, they shouldn’t make up more than 1% of your portfolio.

nfts 1.17.23
(Courtesy of CoinMarketCap)

Investor acceptance: BAYC remains in the #1 position and while CryptoPunks maintains its #2 spot, BAYC’s cousins ​​dominate this edition’s top ten. MAYC moved up one spot from last week to No. 3, while Bored Ape Kennel Club (BAKC) is in No. 4.

If you still think art tokens are worth considering, check out our NFT guide and Best NFT Projects for 2023 list to see which ones matter.

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