How smart contracts can change the balance of power in the crypto industry

One of the familiar themes seen in previous crypto market cycles is that the market capitalization, popularity, and ranking of the top 10 projects that made significant gains during the bull market are constantly changing, but they have become obscured during the bear market. For many of these projects, they follow a recognizable cycle of prosperity to depression and never return to their previous glory.

During the 2017-2018 bull market and the initial coin offering (ICO) boom driven by projects based on the Ethereum network, various smart contract-oriented small projects rose by thousands of percentage points, reaching unexpected highs.

During this period, projects like Bitcoin Cash (Bitcoin cash), Litecoin (LTC), currency (XMR) And ZCash (Jersey) Also took turns entering and exiting the top 10, but to this day, investors are still debating which project actually provides a “useful” use case.

Although all these tokens are still unicorn-level projects valued at billions of dollars, these megaliths are far from their previous brilliance and it is now difficult to maintain relevance in the current ecosystem.

Let’s take a look at some of the current projects that have the potential to remove these dinosaur tokens from their habitat.

Stablecoins linked to the U.S. dollar become the most “tradable” currency

Bitcoin (Bitcoin) The initial use case stated that it would simplify the process of making transactions, but when other blockchain networks are considered to be the case, the network’s “slow” transaction time and costs associated with sending funds make it a better value than a medium of exchange Storage options.

Terra (LUNA) is a protocol that focuses on creating a global payment structure through the use of stablecoins linked to fiat currencies. It has become a possible solution currency for the problems faced when trying to use the top proof-of-work (PoW) project as a payment.

In addition to LUNA, the main token used to trade value on Terra is TerraUSD (UST), which is an algorithmic stable currency pegged to the U.S. dollar and forms the foundation of Terra’s decentralized finance (DeFi) ecosystem. As the number of activities and users in the ecosystem increases, the market value of UST has been steadily increasing in 2021.

UST supply changes. source: SmartStake

Recently added Ether (Ethereum) as a Choice of Collateral for Minting UST The anchor protocol provides a way for token holders to access the value of their ether without having to sell and create taxable events.

This opens up the possibility of using other tokens (such as BTC) as collateral to mint UST that can be used for daily purchases.

Currently, the loan APR of UST on Anchor is 25.85%, and the distribution APR is 40.67%, which means that users who borrow UST with LUNA or Ether actually get a profit when borrowing with their tokens.

From privacy coins to privacy protocols

Privacy is also a cornerstone feature of the cryptocurrency field. Privacy-focused projects like XMR and ZEC provide obfuscation technology that supports transactions that were hidden or once considered untraceable.

Unfortunately, regulatory concerns make it more challenging for users to access these tokens, as many exchanges have delisted them for fear of causing the ire of regulators, and the overall demand of crypto users declines with their availability.

Their lack of smart contract capabilities also limits the capabilities of these protocols. So far, users seem to be not too excited about using Wrapped Monero (WXMR) in DeFi because the token loses its privacy features in the process.

These restrictions have led to the development of privacy-centric protocols, such as Secret Network, which allows users to create and use decentralized applications (DApps) in a privacy-protecting environment.

Privacy features are not common in platforms that support smart contracts in the crypto ecosystem, which makes Secret an experimental case in the evolving Web 3.0 environment.

Decentralized applications on the secret network.Source: Secret

Secret is also part of the Cosmos ecosystem, which means it can use the Inter-Blockchain Communication (IBC) protocol to seamlessly interact with other protocols in the ecosystem.

The network’s native SCRT can be used as a value transmission medium on the platform, and it can also interact with protocols running on the network, including the Secret DeFi application and the network’s NFT product Secret Heroes.

New enterprise solutions are not better, but they are uncontroversial

One of the ways that cryptocurrency projects try to distinguish themselves from the “medium of exchange” label is to provide enterprise solutions as a way to help companies transition to blockchain-based infrastructure.

Ripple And stars (XLM) Are two old agreements in line with the bill, but the ongoing disputes and slow development have caused these early promoters to be catching up with the newer networks, and these networks have not followed the legal disputes of Ripple for many years.

Hedera Hashgraph has become a competitor in this field. Data shows that the network can process more than 10,000 transactions per second (TPS), with an average transaction fee of US$0.0001 and a completion time of 3-5 seconds.

These statistics are comparable to XRP and XLM, which shows that their ledgers reach a consensus on all outstanding transactions every 3-5 seconds, with an average transaction cost of 0.00001 XRP/XLM.

Hedera also has a smart contract function, which means that users can create replaceable and irreplaceable tokens, and developers can build decentralized applications to cooperate with the network’s decentralized file storage services.

For each field (stable coins, privacy, and enterprise solutions), the main difference between old-school and next-generation projects is the introduction of smart contract features and plans to develop in the sidechain and DeFi areas where top-level protocols exist. This is New projects provide additional utility, enabling them to meet the needs of investors and developers, thereby increasing their token value and market value.

Through smart contracts, the ability to interact with the ever-growing DeFi environment is built-in, while traditional tokens like LTC, XMR, and BCH require special packaging services. These services will insert intermediaries to add additional costs and Strictness and risk.

The newer agreement also uses a more environmentally friendly proof-of-stake consensus model that is consistent with the greater global shift towards environmental awareness and sustainability. One advantage is that holders can also directly stake their tokens on the network to obtain income.

It remains to be seen whether the slow passage of time will eventually lead to the migration of capital from older large-scale projects to new-generation agreements, or whether these traditional blue chips will find a way to develop and survive in the future.

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The views and opinions expressed here only represent the views of the author and do not necessarily reflect the views of Every investment and trading action involves risk, and you should conduct your own research when making a decision.