The Cryptocurrency Trading Journal
- Thread starter Daal
- Start date
I learned how to program back in 1999, since then I learned several programming languages. It was one of those things that once you learn one, you can learn a bunch of other ones because they are similar enough that all it takes is effort. That made programming languages a matter of preference (especially, if you are the one building the project) but also sometimes a matter of technology.
In blockchain programming is completely different, because 1 bug and the entire project is buried and hundreds of millions of dollars are lost. The way to avoid those bugs is to re-use code, code written by other people that have survived the test of time. Its the low risk away of coding dApps, the high risk is to code in a new language where there is no large library of already written code that you can re-use
For the reason, Ethereum's Solidity is a monopoly, the longer it is used, the longer it will be used because people will be too afraid of using anything else
The fact that Cardano and Solana have implemented ways to port Solidity code into it backs this. So they are sponsors for the Ethereum network effects.
So my prediction in the 'platform wars' is that Ethereum already won, now there is a fierce battle for 2nd place. I dont know who will win, its a very difficult problem to analyze but I think betting on the monopoly is the easy bet. I have small bets on ADA and SOL (and I plan to cut more of my ADA before Sep 12 hard fork) but I think the easy money will be made on Ethereum
Today I dumped all of my Polkadot and will dump the rest of my ADA by the end of tomorrow. Half of this is going to fiat (pure fiat, not stablecoins) and half into ETH.
I think this game of picking the 2nd best platform chain is a tough one that requires a lot of expertise, I dont think the winners are going to be these 2, specially when I consider the already big market cap vs what they have actually delivered. If I had a gun to my head I would say it is Solana, not because of the tech, the tech seems ok, its just a high throughput chain, but because Sam is a fucking winner and he knows that by doing all this sponsorship deals he can win some of the public support. He is getting celebrity after celebrity and making FTX/Solana look cool, which should help to clean up its image as a VC chain (which it is). I got a small position there and given all the influencers shilling this recently and the 'consensus' that SOL is the next big thing, I would not be a buyer right now. So I just hold. I also have a small position on LUNA but I will most likely dump when the chart turns because this has the same issue as the other chains, namely, they are competing against the Solidity/Ethereum Virtual Machine monopoly and if they incorporate it, they help to support it. If they dont, the platform is not secure enough for big projects (But good enough for rug projects)
Its also good that this move will balance out my risk a little, I want to be raising fiat as the market rises
I think this game of picking the 2nd best platform chain is a tough one that requires a lot of expertise, I dont think the winners are going to be these 2, specially when I consider the already big market cap vs what they have actually delivered. If I had a gun to my head I would say it is Solana, not because of the tech, the tech seems ok, its just a high throughput chain, but because Sam is a fucking winner and he knows that by doing all this sponsorship deals he can win some of the public support. He is getting celebrity after celebrity and making FTX/Solana look cool, which should help to clean up its image as a VC chain (which it is). I got a small position there and given all the influencers shilling this recently and the 'consensus' that SOL is the next big thing, I would not be a buyer right now. So I just hold. I also have a small position on LUNA but I will most likely dump when the chart turns because this has the same issue as the other chains, namely, they are competing against the Solidity/Ethereum Virtual Machine monopoly and if they incorporate it, they help to support it. If they dont, the platform is not secure enough for big projects (But good enough for rug projects)
Its also good that this move will balance out my risk a little, I want to be raising fiat as the market rises
I am mainly in ETH, have a smaller BTC position because it will get legacy status as a crypto commodity; but shouldn't hold the top market cap spot forever. And very small allocations to a handful of the other larger alternates like SOL, DOT, ADA, etc.
At present I have been approaching the alt allocations in a naïve portfolio construction manner; just trusting the market to price them and collecting some diversification, since I don't have any alpha here. The positive carry on every position from staking or liquidity provision is really nice.
Regarding your thoughts about the race for second place; do you think there will be one dominant runner up to ETH and every other coin will get it's market share taken by it? One scenario I could see is that they all find niches and ways to integrate into the primary crypto structure; they all retain a following and specialization continues to occur as time goes on. In that case maintaining these allocations would be a good thing.
But if a winner-takes-all scenario seems much more likely to you I can see why you'd start reducing and consolidating into fiat. Perhaps it's wishful thinking but it seems likely that in-flows into the space will continue and it's hard to imagine these coins with decent capital already invested will be going backwards in market cap. Re-balancing back to risk targets is always a good thing, but I think this space is more likely to exhibit momentum rather than mean-reversion in the large scheme. So I haven't been too wary of continuing to add ETH since I bought at $2,700 through the current rally.
At present I have been approaching the alt allocations in a naïve portfolio construction manner; just trusting the market to price them and collecting some diversification, since I don't have any alpha here. The positive carry on every position from staking or liquidity provision is really nice.
Regarding your thoughts about the race for second place; do you think there will be one dominant runner up to ETH and every other coin will get it's market share taken by it? One scenario I could see is that they all find niches and ways to integrate into the primary crypto structure; they all retain a following and specialization continues to occur as time goes on. In that case maintaining these allocations would be a good thing.
But if a winner-takes-all scenario seems much more likely to you I can see why you'd start reducing and consolidating into fiat. Perhaps it's wishful thinking but it seems likely that in-flows into the space will continue and it's hard to imagine these coins with decent capital already invested will be going backwards in market cap. Re-balancing back to risk targets is always a good thing, but I think this space is more likely to exhibit momentum rather than mean-reversion in the large scheme. So I haven't been too wary of continuing to add ETH since I bought at $2,700 through the current rally.
I think it is winner take all because the network with the network effects will scale more easily (ETH Sharding+L2s is similar to DOT Parachains, but a lot more developers/community will be behind it), will be more secure, will get more developers, etc, etc. Internet protocols tend to be winner take all (http, SMTP, etc), its just that the value didnt accrue to any tokens but to businesses that used them well
It might not be winner take everything, there might be some left overs for the others. But I dont think the stuff I have seen from DOT makes me confident in it, all the staking experience, the money rule all, the voting experience, the shitty chart vs ETH, the horrible UI's (terrible for newbies), etc etc. And ADA market cap (relative to ETH) is dettached from fundamentals due retail chasing. Get this down 70% and I'm probably a buyer. They are yet to present real progress, but I do like that they have a vibrant community, its just that I dont think the price makes sense vs ETH. They are just an ETH sidechain like all the others but they are the most expensive ETH side chain without any real applications there
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Blockchain programming is a scary thing, one bug and your entire company is bankrupt and your reputation is destroyed. Solidity and the EVM is where there is more safety because of old programs that were already coded that were tested by time, you can just reuse a lot of that stuff. So when a new chain says 'we have this new programming language that is flashier than solidity' its like saying 'we have a new airplane that have 3 wings, its better faster and cheaper', yet they have never tested that airplane. Would anyone really want to fly in it? Maybe some crazy people, but most wont.
Solidity/EVM are Boeing 747's, flashier new things are Airplanes with 3 wings or no wings at all. They might work great on paper (or peer reviewed research like Cardano loves) but the creators have no idea if it will work in reality
Solidity/EVM are Boeing 747's, flashier new things are Airplanes with 3 wings or no wings at all. They might work great on paper (or peer reviewed research like Cardano loves) but the creators have no idea if it will work in reality
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So as a result, all flashy new chains incorporate Solidity/EVM because they know this. So, they are pretty much side chains for Ethereum, like Matic, BSC or xDai. They might be more secure, but its not by much. What they are really good is at marketing, at promoting themselves, hence the market caps
In the next 12 months there will be a bull market in EVMs (Ethereum Virtual Machine), Arbitrum (Ethereum L2 protocol) implements it. Some ZK roll-ups do as well. I bet other scalling solutions will do it too. As a result, you will have this massive EVM (Ethereum Layer 1) with giant network effects where people are desperate to get in a block at any price necessary (hence high gas prices) lending its security to L2s protocols that implement the same EVM (so you can port Solidity applications there in a short period of time). The L1 will be the settlement layer, the L2s will be the high throughput low fee high transaction layer, it will rely on the L1 for checkpoints and finality. It will be a beautiful marriage
And investors are supposed to believe that all these "eth killers" have a chance when they all implement the same EVMs? Polkadot, Cardano, Solana, BSC, Avalanche, you go down the list, they all implement the EVM with less security than Ethereum, less network effects, less developers, less trust on their long-term future(hence, no one is fighting to get in a block there). The great EVM inflation is coming and it wont be pretty for these expensive massively marketed EVMs
And investors are supposed to believe that all these "eth killers" have a chance when they all implement the same EVMs? Polkadot, Cardano, Solana, BSC, Avalanche, you go down the list, they all implement the EVM with less security than Ethereum, less network effects, less developers, less trust on their long-term future(hence, no one is fighting to get in a block there). The great EVM inflation is coming and it wont be pretty for these expensive massively marketed EVMs