2019 January 28 - Volume.3 Issue.3

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2019 January 28 - Volume.3 Issue.3

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EOS, Tron Lure Betting Crowd to Decentralized Applications

While Ethereum alone transacted over $7.6Bn on-chain for Decentralized Applications (Dapps) in 2018, largely coming from Decenetralized exchanges (DEX), adoption has been dwarfed by rival platforms. EOS and Tron Dapps now account for 94% of US Dollar volume across the three major blockchains having won over gamblers.


Close to $13Bn has been transacted on the three main active blockchains, Ethereum, EOS, and Tron in 2018. In January to date, $1.5Bn in value has already been transacted on the ledgers.

|| EOS DAWNS

After raising, purportedly, a whopping $4.2Bn in a token distribution sale, EOS in 8-months has taken over the reigns from Ethereum accounting for nearly 50% of US Dollar traded volume on Decentralized Applications (Dapps) since the platforms launch.

As of January this year, to date, EOS Dapps are accounting for 55%, Tron 38% leaving Ethereum applications with a mere 6% of total on-chain USD volume.

|| CARVING NICHES

But there is a clear group levitating towards the two new blockchains - gamblers. Of the $5.5Bn already transacted on EOS, 70% go towards gambling dapps. This number is over 95% for Tron.

Gambling Dapps only account for a tiny 2% of total US Dollar transaction volume on Ethereum despite nearly half of the applications being betting spots (see chart). The overwhelming majority of trading went towards trading on DEX - and even that now faces a continuous adoption downfall (see story below).

|| APPLES AND ORANGES?

Ether on-chain transactions are however at an all-time high (Diar, 21 January). Financially driven projects such as Maker/Dai, Compound, dYdX, and Stablecoins have found sanctuary on the Ethereum blockchain.

But EOS has said to have earmarked $1Bn to incentivize developers to build on top of their platform (Diar, 22 June 2018). It has gained over punters - a group that Ethereum developers haven't been able to attain.

It's unlikely that this pose a long-term development threat, however, with major cryptocurrency institutions having backed financial projects already geared for Ethereum (Diar, 29 October 2018).

EOS, Tron Gamblers Take Over Decentrazlied Applications (USD)


EOS Dapps Distribution by Category


ETH Dapps Distribution by Category


Daily Active Users (Total for Month) - Link to Editor Comments

NotesGambling is inherently high-volume trading. Data reflects total unique addresses used per day - not necessarily unique user total.
Source: dappradar.com


Decentralized Exchange Trading Volumes Hit All Time Low

Decentralized exchanges have now hit an all-time low in terms of US dollar traded value, as well as Ether transaction on-chain. And unique addresses - traders for lack of data clarity, has now also entered a new low as major exchanges amp up their efforts to go on-chain. But will there be any demand?


Whilst Ether on-chain volumes are hitting a new high, this has not come on the back of users on decentralized exchanges (DEX) (Diar, 21 January).

Since June 2017 when DEX began appearing online, a total of $8.9Bn has been traded on-chain. Last year accounted for the most - just pipping over $7.1Bn.

|| HOW LOW CAN YOU GO?

But DEX volumes have now dropped to a new low of $49Mn for the month of January - to-date - less than a tenth of what the largest centralised exchange Binance trades, alone, on a daily basis.

In terms of Ether, this month is a mere third of what was traded on Ethereum DEXs in January 2018. At peak, over 2.3Mn ETH was traded in May 2018 - now down to 400K.

|| IF YOU BUILD IT....WILL THEY COME?

Major exchanges have all shown interest in pursuing the DEX model. Binance has already shown a short demo of their platform. OKEx's Open Ledger DEX has launched, as has Bithumb's DEX. And Coinbase last year purchased Paradex.

But none have managed to win over traders in any significant regard despite the allure of near low, or no fees at all.

And this is unlikely to change with current slow user experience infrastructure that demands deposit, withdrawal and transaction gas fees - low as they might be.

Decentralized Exchange USD Volume Hits All-Time-Low...


...And Unique Addresses Trading on DEX Not Far Behind New Low


Source: Diar Calculations, dex.watch Notes: Jan-2019 till 2019-01-26


JP Morgan Assesses Bitcoin Value - Overstated Gloom?

A perspectives report published by JP Morgan last week saw the Wall Street Major look into the price dynamics of Bitcoin alongside the cost of production. The investment bank sees a potential floor of $1260 for Bitcoin as mining margins tighten forcing smaller producers out, leaving miners with low-cost resources to set a new floor. But should their valuation method be sound, the gloomy numbers may be less than estimated by Park Avenue.


Major institutions may not have piled into cryptocurrency as many hoped, but they are taking notes. The latest JP Morgan report looked at the developments of Blockchain, and assessed Bitcoin's price correlating it with the production costs.

"One way to estimate a quantifiable intrinsic value for Bitcoin is to effectively treat it as a commodity and base it on the marginal cost of production" the report said having estimated 4Q18 production cost for miners with low cost electricity at $2400.

Diar calculations however estimate that average to be closer to $3100 using optimal equipment, wholesale electricity prices and excluding Capital and Operational Expenditure.

The report assessed that fluctuations in hash power may result in smaller miners dropping off, resulting in a lower cost of production for Bitcoin and hence, the potential $1260 floor. However this point may be remiss that small retail miners have already met their exodus since October last year with mining returns going into the red (see chart) (Diar, 8 October). As such, massive declines in a hash power now steady is unlikely (Diar, 14 January).

Bitmain S9 miners, which only recently relinquished its crown to its more efficient bigger brother last month, the S15, would currently run unprofitable at electricity costs over $0.06KWh.

|| ONE STEP BACK, ONE STEP FORWARD..

The cost of production will however go down on the back of new, more efficient equipment being deployed (Diar, 26 November). However, with a limit set on sale quantity, efficient miners growth will likely come online gradually. But the halving only 18 months away would put the production cost of Bitcoin right back up to $3000 at current hash power levels.

Bitcoin Cost of Production ($0.05 KWh)


Note: **Bitmain Antminer S15 didn't come into production till December 2018. Charting for illustrative purposes. Halving calculation based on current network hash rate.


Bitcoin Cost of Production for Retail Miners ($0.1 KWh)


Source: Diar Calculations, Blockchain, Coinmetrics, Bitmain


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