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The Hard Fork – Weekly Market Commentary

This Week’s Topics:
1) Gaming dApps pass up decentralized exchanges in daily active users
2) SEC sets November 5, 2018* as deadline to review previously rejected BTC ETFs
3) Alt-coins turn to security tokens: Iconomi exchanges native token for equity token

Indices Round-up

7 Day Price Movers 

Ripple fell the most among our indexed assets this past week, trading down nearly 20% over the past seven days. At the opening of Ripple’s Swell conference on October 1, 2018, XRP rallied 7.5%. Shortly after the conference’s initial opening, XRX index prices began falling and have continued this trend in the days since.

Figure 1: XRX Index Prices Over One Week

Data for chart sourced from the TradeBlock platform

Bitcoin, the largest digital currency by market cap, remained nearly unchanged on the week, while the rest of our indexed assets continued their bear trend. Zcash, which showed the second largest downward move this week, is expected to have a major upgrade to its network this month–the upgrade is codenamed, Sapling. The activation block is set to be mined on October 28, the anniversary of Zcash’s initial launch. The Sapling upgrade comes after more than two years of development and is expected to improve the functionality and performance of encrypted transactions.

Gaming dApps pass up decentralized exchanges (DEXs) this week in number of active users for the first time since 2017

Daily active users on DEXs have fallen from an all time high of ~20,000 in January 2018, at the peak of market prices, to just over 2,000. Gaming dApps, likewise, saw a precipitous decline in users from December 2017 as daily active users fell from a peak of ~14,000 to over 2,000 today. While both dApp categories have seen daily active users fall quite significantly, gaming dApps have closed the gap on DEXs, holding around 100 more daily active users (at time of writing).

Figure 2: Daily Active Users by Category

Chart sourced from Dapp Radar

The most popular gaming dApp, in terms of both user volume and ether transaction volume, remains CryptoKitties, which allows users to buy, own, and trade unique cartoon digital cats. CryptoKitties currently has over 490 active users over the past 24 hours and has seen more than 94 ether ($20,915 at latest ETX index prices) transacted on the platform over the same time frame.

Other notable categories to mention are marketplace dApps. While these dApps continue to gain users, they remain limited in daily user activity. Decentraland, which offers a virtual reality world, ranked in first place with the most daily active users at 73 over the past 24 hours. Of note, nearly $420,000 USD traded hands on the dApp this past week as users bought and sold ‘land’ parcels in this virtual world. The most expensive listing right now is for a parcel of land near the main square for $782,680. This parcel was purchased at Decentraland’s first auction eight months ago for just under $30,000.

The United States SEC sets October 26 deadline to review previously rejected Bitcoin ETFs

The SEC has set a deadline for October 26, 2018 to decide whether to approve nine bitcoin ETFs that were previously rejected on August 22, 2018. SEC Commissioner, Hester Pierce, who has been an advocate for a bitcoin ETF, ordered a review shortly after the council rejected the varying ETFs back in August. We had written in depth on this topic last month after the initial rejection saw XBX index prices fall ~6% soon after the news broke.

Alt-coins turn to security token offerings

Security tokens continue to receive more attention recently in the digital currency space as start ups have moved away from the non-security ICO model to raise funds. August of 2018 saw the lowest capital raise for ICOs in the past 16 months. Even some existing alt-coins are looking to replace their native token with a security token that resembles more closely traditional financial instruments. For example, this past week Iconomi (ICN) announced that they will be reshaping their token model. Iconomi conducted its Initial Coin Offering in 2016, which was the second largest raise in 2016 behind the Waves ICO. Iconomi seeks to connect digital currency strategy managers with a community of users who can then buy into those strategies they deem most suitable to their investment needs.

The Iconomi team has stated that beginning November 1, 2018, holders of ICN tokens will need to convert their existing tokens to equity tokens in a new company. The equity tokens are to be securities that represent shareholder rights in a new company expected to continue Iconomi’s operations. Existing holders that choose not to receive equity tokens, will be able to sell their tokens after November 1, 2018, back to Iconomi at the exchange rate of 0.0019 ETH for 1 ICN ($0.422 at latest ETX Index prices). At time of writing, this exchange rate is at a 7.7% premium to the last trade on Binance, which currently does nearly 70% of the total trading volume in ICN.

 

*Previous version had October 26, 2018 as the deadline. October 26, 2018 is the deadline for comments, not for final review.

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