Disclaimer: Your capital is at risk. This is not investment advice.
Four tokens have been through our rigorous qualitative and quantitative analysis since the start of the Token Takeaway series. Last week, we finished our analysis of COMP which is the native governance token of Compound.Finance. Check out part two, here. This week, we are looking back at the highlights and progress that each token has made since we first covered them.
Before we jump into it, I would like to share a response from an avid follower of Token Takeaway:
“Well done and thank you for your work on Quant. Went in mid-'30s…. bought a few COMP as well. Clearly keeping a very close eye on your recommendations!”
Token Takeaway I: QNT and the Quant Network
From a high level, Quant aims to recreate the Apple app store for applications built in the digital asset ecosystem. Interoperability is key to their success, meaning they must utilise their “gateway” technology to connect enterprise and application. Ambitious targets but a capable team.
From a qualitative standpoint, QNT and the surrounding Overledger network boasted credible partnerships and a world-class team, with emphasis on Gerbert Verdian, who has the potential to be the wildcard a project like Quant needs.
Furthermore, the utility of the Quant token provides users with a multitude of avenues that generate real value for holders. In the main, fees were the main use case but a more positive aspect of QNT is the community treasury which essentially gives tokenholders ownership rights too.
Our quantitative analysis showed an equally promising picture; good technicals, a huge competitive margin and an addressable market cap which if capitalised on would catapult QNT. So, what has happened to QNT since we originally wrote about it?
Quant has experienced parabolic growth. Hopefully, Token Takeaway readers captured some of these eye-watering returns. As far as our conviction score, we recommended a trade and perhaps a trend when a base was created. I would keep the score as a 3.5/5, but I hope avid traders captured the 2-bagger.
Token Takeaway II: MIR and the Mirror Protocol
The Mirror Protocol was our lowest conviction score since starting Token Takeaway. For the less-versed, Mirror aims to recreate the stock market on the Terra, BSC and Ethereum blockchains. It aims to achieve this by creating “synthetic” stocks which track the price of real-world assets.
From a qualitative perspective, the team behind Mirror is proven and well-funded. The utility of the token generated value for holders through yield opportunities. On the other hand, quantitative analysis showed competitor outperformance in the short-term and a technical viewpoint that spanned a small timeframe.
However, we highlighted a point that ultimately has seen MIR underperform since we wrote about it. Regulation. Uniswap, which is the largest decentralised exchange has started to delist “mirrored” assets; this has caused many to speculate whether regulatory intervention was at play here. Speculation aside, being delisted from Uniswap is not a good thing.
Conviction Score downgraded to 1.5/5, pending review if regulatory position improves.
Token Takeaway III: AXS and the Axie Infinity Universe
AXS and Axie Infinity continue to excite us, their overarching aim to create a “play-to-earn” economy instantly strikes the attention of turn-based gamers. Before Axie a game has never empowered users to benefit from their involvement. Traditionally, gaming business models thrive off the opposite, ie “play-to-win” economics. Furthermore, AXS is essential in this ecosystem as it provides a wide range of utility-driven features for tokenholders as well as governance rights.
The Sky Mavis Group are behind Axie Infinity and are expertly suited to a technology-focused gaming experience, with members such as Aleksander Larsen on the Blockchain Game Alliance. From a partnership perspective, Axie boasts outer-crypto names such as gaming giant Ubisoft and tech-focused Samsung. Within the digital asset space, Binance, Maker, Kyber and Delphi Digital are an equally credible group of backers.
Most importantly, Axie is starting to impact the daily lives of the “real” world. It is no longer just a crypto-concept and instead has generated documented stories of helping supplement wages in economically and politically unstable countries such as the Philippines or Venezuela. Ultimately, this has led to Axie generating the most revenue of any protocol, and around the same as the entire Ethereum blockchain; $225m in revenue in the last 30 days. (Figures can be found on TokenTerminal)
From a quantitative viewpoint, AXS showed promise and certainly looked to be leading the charge of the NFT sector. A relative look at AXS and its competitors showed a positive break away from the market trend. In a weak market, this should look like gold dust to investors. Since we wrote about AXS, the parabolic performance has continued.
Overall, our conviction score called for a definite trade and I hope readers took that in good stead. While we remain very bullish about Axie, a 4/5 score is still the correct long-term view of Axie. It has a lot more to do, starting with releasing its community treasury.
Token Takeaway IV: COMP and Compound.Finance
COMP offers investors the perfect way to gain exposure to the decentralised finance (“DeFi”) sphere. From a high level, the platform enables users to generate yield that is unattainable in the traditional “risk-free” world. From a token’s perspective, COMP is a governance token but that is not all. COMP distribution offers platform users a bonus on their lending and borrowing ventures.
From a qualitative perspective, COMP is situated in the fastest growing sector, DeFi. Current DeFI Total Value Locked (“TVL”) stands at US$72bn. Compound has a nearly 25% share of the lending sector, which accounts for nearly half of the DeFi sector’s TVL (US$34b). The team, partnerships, and Delaware incorporated company behind Compound are fantastic and well-revered in the digital asset space. All the qualitative analysis aligns.
From a quantitative perspective, the technicals put COMP in the upper range, poised for a breakout should a trend settle on DeFi. The current unstable macro conditions in the traditional world could be the catalyst here, a dropping bond yield and negative rates can only be positive for Compound’s money markets. However, COMP is not the leader in the lending sector as comparative analysis with Aave showed a widening gap between the two.
Whilst it is too early to call our conviction score right or wrong, the technicals for COMP look promising. Our score of 3.5/5 still stands. Perhaps a positive break above the 30 day MA is something to keep an eye on. Whatever the short term price behaviour I think it is good to reiterate that our long-term view of COMP is bullish; especially with products such as Compound Treasury.
I thoroughly enjoy writing these Token Takeaways and we hope they are generating value for our readers.