Report: Crypto Moonshots on Polkadot
In our last article we explored the Binance Smart Chain ecosystem to identify crypto moonshots. In this article we turn our attention to Polkadot, another blockchain which is home to a number of exciting and undervalued projects.
Polkadot is described as the mother of all blockchains. It was founded by the co-founder of Ethereum and went live in May 2020. Its potential has been quickly recognized by the market and is now the sixth most valuable blockchain.
A little about Polkadot before we get into some of the many exciting projects that have been built on it.
Polkadot Explained
At the heart of Polkadot is a concept called “parachains”, these are blockchains that can run higher transaction throughput than Ethereum because they utilize parallel chains to process transactions.
Polkadot is designed to join the dots with other networks. It’s commonly referred to as a multi-chain network because it can join networks together, in contrast to networks like Bitcoin for example.
Its ultimate aim is to act as a framework for all blockchains that opt-in. The idea is to take care of costly and time consuming cryptocurrency mining processes and enable developers to focus on creating Dapps and smart contract functionality.
Polkadot’s native token is DOT. DOT is currently valued at $25 billion, around half that of Binance’s native currency BNB and a tenth of the value of Ethereum.
Quality rather than Quantity
Whilst Polkadot was a little earlier to the blockchain party than Binance Smart Chain (which went live in September 2020) it hasn’t seen the same level of explosive growth and has far fewer projects built on its chain. However there is a noticeable difference which is not obvious to the average crypto observer.
Whilst the number of projects may be fewer the quality is far higher. For example the memecoin phenomena has largely been confined to Binance Smart Chain which has led to countless projects being launched with no or limited use cases. There is a good chance that the majority of these projects will be dormant within twelve months.
Polkadot however has attracted far fewer projects than the likes of Ethereum and BSC however in the main projects built on its platform are well thought out and generally involve technology solutions to real life problems. In fact some of the most exciting recent project launches have occurred on Polkadot including Polkastarter and Poolz two stand out launchpads and Bridge Mutual and Nsure two DeFi insurance platforms.
If you had to put a label on Polkadot it would be as the Rolls Royce of the blockchain world. Ethereum is Ford and Binance Smart Chain Skoda.
Our Search
In our search for moonshots we examined all the projects listed on Coin Market Cap and CoinGecko which numbered over 50. Our search focused on projects with a market cap below $1bn and above $500,000, in our experience this is the most fertile ground for discovering moonshots.
From this search we identified 16 projects which we believed held the most potential and from those we selected three possible moonshots which are worthy of further due diligence.
List of Polkadot projects that deserve closer attention
Our Moonshot Selection
Ocean Protocol (OCEAN)
Overview
Ocean Protocol is an ecosystem for sharing data and associated services. It provides a tokenized service layer that exposes data, storage, compute and algorithms for consumption with a set of deterministic proofs on availability and integrity that serve as verifiable service agreements. There is staking on services to signal quality, reputation and ward against Sybil Attacks.
Ocean helps to unlock data, particularly for AI. It is designed for scale and uses blockchain technology that allows data to be shared and sold in a safe, secure and transparent manner.
The Ocean Protocol is an ecosystem composed of data assets and services, where assets are represented by data and algorithms, and services are represented by integration, processing and persistence mechanisms. Ocean Protocol facilitates discovery by storing and promoting metadata, linking assets and services, and provides a licensing framework that has toolsets for pricing.
A multitude of data marketplaces can hook into Ocean Protocol to provide “last mile” services to connect data providers and consumers. Ocean Protocol is designed so that data owners cannot be locked-in to any single marketplace. The data owner controls each dataset.
Our Opinion
Price: $0.82
Fully Diluted Market Cap: $500 million
Target Price: $3.50
Risk Score: 5
On the face of it Ocean is just another data privacy company, but you have to look deeper to discover the magic. Protecting the privacy of data is of paramount importance. If a corporation wishes to utilize third party data then it usually involves gaining access and storing the data before analyzing it.
With blockchain, data can remain private, projects like Ocean are able to manage the data through the blockchain without the users of that data having control of it. That means there is separation between the owner of the data and the content. It is the content that is valuable to a market researcher not necessarily the owner.
Ocean is one of the leaders in this space. Ocean has a fully diluted market cap of $500 million which is relatively cheap for such a promising project. We believe a valuation of nearer $2 billion is more than justified for such a quality project.
AdEx (ADX)
Overview
AdEx (ADX) stands for “advertising exchange.” After a successful crowdfunding campaign in 2017, AdEx was the first startup to release an open-source protocol for decentralized advertising in 2018 and the first ad network processing payments on the Ethereum blockchain.
By using payment channels, AdEx ensures full transparency for all involved parties. Moreover, AdEx is using its own Layer-2 scaling solution called OUTPACE to facilitate micro payments per impression between its advertisers and publishers, processing more than 2,5 million transactions daily.
After successful beta tests, AdEx Network released the AdEx Platform in 2020 and scaled it to 8,000 registered advertisers and publishers generating more than 70 million monthly impressions. In August 2020 AdEx started incentivized staking and liquidity providing programs for the ADX token, interacting with the DeFi ecosystem and engaging its community into actively supporting the stability of the AdEx Platform.
Our Opinion
Price: $0.80
Fully Diluted Market Cap: $101 million
Target Price: $3.50
Risk Score: 5
Whilst ADX is a small player in a massive market it has established a lucrative niche. This niche is experiencing strong growth seeing a 242% increase in advertisers using its platform in a year. Advertisers obviously recognize the merits of ADX’s service giving it the potential to grow into a substantial force in the market place. A market cap of $101 million seems to undervalue this promising project. We believe a minimum value of $500 million is justified based on its strong user growth and its leading position in this small but growing market.
DMScript (DMST)
Overview
DMScript is a blockchain-gaming company dedicated to backing and releasing video game-related projects utilizing the blockchain technology.
They utilize their DMST tokens as a way for users of any of DMScript’s projects to enjoy premium features only accessible via using the token instead of FIAT. Users will have the liberty to switch currencies whenever they desire using any of their projects with ease.
Our Opinion
Price: $0.089
Fully Diluted Market Cap: $9 million
Target Price: $0.50
Risk Score: 9
DMScript we believe has the greatest potential of all the projects we reviewed. Let us explain why. DMST is basically an incubator for games wishing to launch on the blockchain. By positioning itself as the go to expert in the development of games on the blockchain this provides both the developer and the user with benefits. The developer gets a leg up in an area not familiar to most of them and the gamer gets access to a wide range of games. That is the theory anyway.
DMST has partnered with leading players in the gaming industry including Twitch and the esports company OG. It launched its first game in November 2020 and is in the progress of developing more games on the Twitch platform which are due to be launched imminently. With a fully diluted market cap of $8 million we believe a fairer value would be $50 million given its potential, that translates to a price target of $0.50 not far from its ATH of $0.34.
Summary
With the market in turmoil this is the best time to pick up quality projects on the cheap. One of the best places to find a better class of crypto project is on the Polkadot ecosystem. But don’t let your guard down, there is still no shortage of projects which sound convincing on paper but where the execution has been abysmal. Take STP Network for example. A promising project that nearly made the cut. It commands a market value in excess of $100 million but has failed to make any meaningful progress and keeps its community in the dark. Whilst it takes a brave person to be hunting for gems in a falling market if you believe in the future of blockchain and cryptocurrency there is in fact no better time.
Summary
If you are on the hunt for memecoins with potential then searching through the many new projects hitting the market every day is your best bet. Although you have probably crossed swords with the guy or gal who just made $2 million dollars on a small investment in SafeMoon the odds are against you. There is still no reason why we can’t participate in this phenomenon as long as we know the risks and don’t bet the house or the wife.
We can increase our chances of success by carrying out some basic due diligence so that we quickly rule out the projects which are a complete hustle. Remember this party isn’t going to last. That means someone is going to be left holding a bunch of worthless tokens. There will be a few that will stay the course and end up having value simply by their huge network effect, others however will disappear. If you enter this crapshoot and place your bets on a few carefully selected memecoins you have a better chance than the sceptic sitting on the sidelines who secretly wants to get involved too.
Not Financial Advice
This article does not constitute financial advice or a recommendation to buy in any way. Always do your own research and never invest more than you can afford to lose. Investing in cryptocurrencies is high risk, and you could lose 100% of your investment. The article should be treated as supplementary information to add to your existing knowledge.
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