Evolve or die: How smart contracts are shifting the crypto sector’s balance of power

The shifting market caps, popularity, and ranking of the top 10 crypto projects, which see substantial gains in bull phases but then fade into the background during bear markets, is one of the most common themes from previous crypto market cycles. Many of these projects follow a predictable boom-to-bust cycle, and they never return to their former glory.

During the 2017-2018 bull markets and initial coin offerings (ICO) boom that was driven by Ethereum network projects, all sorts of small smart contract-oriented project rallied thousands to unexpected highs.

Projects like Bitcoin Cash, Litecoin, Monero (XMR), and ZCash(ZEC) all rotated in and out the top 10. Investors still debate about which project is actually a “useful” case.

These tokens are still high-level unicorn projects that have billion-dollar valuations. However, they are no longer relevant in today’s ecosystem.

Let’s look at some of the current projects that could knock these dinosaur tokens off their perch.

As the most “transactable”, currency, dollar-pegged stablecoins are in the spotlight

Bitcoin (BTC), originally intended to simplify transactions, but its slow transaction times and high cost of sending funds make it a better medium of exchange than other blockchain networks.

Terra (LUNA) is a protocol that aims to create a global payment system through the use fiat-pegged stabilizecoins. It was created to address the problems encountered when using top proof-of work (PoW), projects as payment currencies.

TerraUSD (UST) is the main token for Terra’s value transacting, apart from LUNA. It is a U.S.-dollar-pegged stablecoin and forms the foundation of Terra’s Decentralized Finance (DeFi). As activity and users increased, the market cap for UST has been steadily increasing through 2021.

UST supply change. Source: SmartStake

Token holders now have a way to access the value in their Ether without needing to sell or create a taxable event.

This allows for the use of other tokens, such as BTC, as collateral to mint UST. These tokens can then be used in everyday purchases.

The borrowing APR on Anchor is 25.85% and the distribution APR at 40.67%. This means that users who borrow UST against LUNA or Ether earn a yield even though they are borrowing against tokens.

Privacy protocols and privacy coins

Privacy is an important characteristic of cryptocurrency. Privacy-focused projects such as XMR or ZEC offer obfuscation technology that supports covert transactions, which, at one time, were believed to be impossible to trace.

Users have had to make it harder to access these tokens due to regulatory concerns. Many exchanges have removed them from their platforms for fear of being criticized by regulators. The overall demand for crypto has also declined.

They lack smart contract capabilities, which has also limited the capabilities of these protocols. Users are not excited about wrapping Wrapped Monero to use in DeFi. The token’s privacy capabilities will be lost in the process.

These limitations led to privacy-focused protocols like the Secret Network being developed. This protocol allows users to create and utilize decentralized applications (DApps), in a privacy-preserving setting.

The crypto ecosystem does not have privacy features, so Secret is an experiment in the evolving Web 3.0 landscape.

Secret Network: Decentralized applications Source: Secret

Secret can also be part of the Cosmos ecosystem, which allows it to use the Inter-blockchain communication (IBC protocol) protocol to seamlessly interact with other protocols within the ecosystem.

The native SCRT of the network can be used to transfer value on the platform and interact with protocols operating on the network such as Secret DeFi applications or the network’s NFT offering Secret Heroes.

While new enterprise solutions may not be better, they aren’t worse.

One way cryptocurrency projects tried to distinguish themselves from “medium-of-exchange” was to offer enterprise solutions to assist corporations in their transition to blockchain-based infrastructure.

Stellar (XLM), and XRP are two examples of veteran protocols that fall within this category. However, there has been a lot of controversy and slow development that has caused these early movers to play catch-up with newer networks that don’t have the same legal issues that Ripple has had for years.

Hedera Hashgraph is a new competitor in this market. Data shows that the network can process more than 10,000 transactions per minute (TPS). The average transaction fee is $0.0001 with a time to finality between 3-5 seconds and a time-to-finality of 3-5 second.

These statistics are comparable with XRP or XLM. They have shown that their ledgers reach consensus every 3-5 seconds on all outstanding transactions, with an average transaction cost at 0.00001XRP/XLM.

Hedera can also be used to create smart contracts. This means that users can create both non-fungible and fungible tokens and that developers can develop decentralized applications to go with the network’s file storage services.

The main difference in each sector (stablecoins and privacy, enterprise solutions) is the introduction of smart contracts capabilities and plans for development within the DeFi and side-chain sectors that have the highest protocols. This allows newer projects to be more useful and can meet developers and investors, increasing their token value and market caps.

Smart contracts allow you to interact with the DeFi landscape. Legacy tokens such as LTC, XMR, and BCH, however, require special wrapping services that insert middlemen, which adds fees, rigor, and risk.

The more environmentally-friendly proof of stake consensus model has been adopted by newer protocols. This aligns with the wider global shift towards sustainability and environmental awareness. Holders can also stake tokens on the network to earn a yield.

It remains to see if the slow marching of time will lead to capital migration from older large-cap projects to the newer protocols, or if legacy blue-chips will find ways to evolve and survive in the future.

You would like to learn more about investing and trading in the crypto markets?

Explained Why Ethereum needs better compatibility.Cardano launches smart contract after a successful hard forkProject Dawn initiative. LUNA’s new ATHAltcoin Roundup will also be launched. Layer-one protocols are threatening Ethereum’s dominance. Hedera Hashgraph surges 150% in a single week. You should do your research before making any investment or trading decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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