Bitcoin has had a very strong week coming out of its second major bull market correction. BTC has exceeded $60k, going for a new ATH after climbing consistently over the past week. On-chain metrics continue to show favourable conditions as the BTC supply remains restricted. But we are starting to see some warning signs for the bull run. Nothing imminent or that you should act on immediately, but some things we should pay attention to. The amount of whales holding Bitcoin and the Pi Cycle Top indicator are flashing interesting data.
Below we can see, in the day chart, that two oscillators show trend reversal (MACD and RSI show tend change):
Below we can see, in the weekly chart, that only one oscillators trend reversal (RSI shows tend change):
Below we can see, in the monthly chart, that only no oscillators show trend reversal:
But as always, we should be fast to interpret data, but slow to act on it. When the bear market hits, it won’t be one gigantic drop to the bottom. Bitcoin will continue to fight its way back up between support and resistance giving you plenty of time to exit the market. Basically, no one ever picks the exact top so the important thing is to make sure you are always ready to take profits if the market does drop.
Below we can see the all time BTC NUPL chart:
Below we can see the 2 week BTC NUPL chart:
Note: Nothing to worry about BTC yet.
Below we can see the 2 week ETH NUPL chart:
Note: Nothing to worry about ETH yet.
Below we can see the all time BTC for LTH NUPL chart:
Note: Long Term Holder NUPL (LTH-NUPL) is Net Unrealized Profit/Loss that takes into account only UTXOs with a lifespan of at least 155 days and serves as an indicator to assess the behaviour of long term investors. I think that the chart above shows that we should be little worried about the tendency of the BTC movements.
Below we can see the all time BTC for STH NUPL chart:
BTC Net Transfer Volume from/to Exchanges - All Exchanges:
Note:The difference of in volume flowing into exchanges and out of exchanges, i.e. the net flow of coins into/out of exchanges. Note that exchange metrics are based on our labeled data of exchange addresses that we constantly keep updating, as well as data science techniques and statistical information that changes over time. Therefore these metrics are mutable – the data is stable, but especially most recent data points are subject to slight fluctuations as time progresses. I think that for the immediate future all is good based on the net-flow.
BTC Net Transfer Volume from/to Exchanges 7 day - All Exchanges:
The BTC reserve remains low, so good news:
The ETH reserve remains steadily low, so good news:
Conclusion
In the long run we are going to be millionaires, in the short run we have to be careful. The day chart of BTC has already to oscillators (the RSI and MACD), showing a downward trend reversal. Due to the fact that the this is a day chart, adds significance to the trend oscillators (it means, that it looks like a sign stronger than the hourly charts). Nonetheless in the monthly chart, there is no sign of trend reversal yet.
This article my beloved Crypto peasants is going to do a deep dive to Cardano impressive technology, a true ETH killer. Cardano according to my insanely sophisticated view and understanding is here to stay and in the long run, take over Eth.
Cardano is the blockchain platform for true change makers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change.
For those who’d like to learn a little more about Cardano prior to reading this report, here are some primary links:
Crypto currency use case: N/A the Cardano foundation does not specialise in a specific use case. since this is a Smart Contract chain.
The Cardano cryptocurrency is managed by the Cardano foundation and its HQ is in Switzerland (a decent place for a tech startup). The most impressive part is that Cardano has an employee growth , based on the Linkedin Insights, of 145%. The company behind Cardano is Input Output (IOHK) a research and development company in the field of cryptography and distributed systems. Since IOHK was founded in 2014 it has been involved blockchain research, building a global team of cryptographers and researchers (a headcount of 216 employees).
Below we can see the headcount distribution growth per function (in Cardano foundation):
The company employee ratio, based on speciality seems to be well balanced (in Cardano foundation):
As shown above the foundation does have personnel for Marketing and Community Social Services. The foundation seems to know very well how to attract a big user space (its related personnel for this purpose is 58%).
Cardano Foundation Restructure
The team initially included three conglomerates which held 5.18 billion ADA between them. Emurgo company which aimed to develop, support, and incubate commercial ventures; and Input Output Hong Kong (IOHK), founded in 2015 by Charles Hoskinson and Jeremy Wood. IOHK also works on Ethereum Classic development and focuses on research and development in cryptography and distributed systems.
In October 2018, IOHK released a detailed blog post explaining several issues IOHK and Emurgo have had with the Cardano Foundation, including lack of strategic vision or plan, lack of transparency regarding operations, and misrepresentation of the Cardano trademark. Several members of the Cardano Foundation have since been replaced after restructuring in December 2018 [5].
Launch Overview
Cardano was conceptualised back on 2016 by Charles Hoskinson as a come back for the Ethereum hard fork due to the DAO hack, a decentralised blockchain and cryptocurrency project based on peer-reviewed research using the Haskell coding language. The story began in 2015, with a vision of addressing the three strategic challenges facing all blockchain networks: scalability, interoperability, and sustainability. Cardano ICO was conducted 2 Jan 2018. At the $ 1.49 ATH price on 27 Feb 2021 investors were able to sell this position with 74.48x ROI in USD [4].
Circulating Supply: 31,948,309,441 (71%)
Max Supply: 45,000,000,000 (This could change in the future)
Market Cap Dominance: 2.18%
Market Cap: $40,603,302,243
ATH: 1.49 (27 Feb 2021)
Cardano Partnerships
The Cardano Foundation has the core responsibilities of helping, overseeing, and supervising the development of Cardano and its blockchain ecosystem.
The following partnerships were achieved, with this goal in mind [7]:
IBM Research on January 17, 2020
PwC on January 27, 2020
New Balance on September 30, 2019
COTI Network on October 31, 2019
SIRIN LABS on February 14, 2018
Ellipal Hardware on July 3, 2019
Konfidio on August 15, 2019
Algoz on June 26, 2019
Metaps Plus on May 10, 2018
Z/Yen Group on December 5, 2017
Priviledge on January 24, 2020
ScanTrust on January 21, 2020
Runtime Verification on December 18, 2017
South Korea Government-Approved Trade Associations on August 20, 2019
Ethiopian Government on April 30, 2019
Georgian Government on June 17, 2019
Edinburgh University on February 24, 2017
Cardano Social Media Presence
Below we can see the most popular communication channels for learning more about Cardano:
Introduced treasury systems (aka. DeFi like functionality)
Each era is centred around a set of functionalities that will be delivered across multiple code releases. While the eras of Cardano will be delivered sequentially, the work for each era happens in parallel, with research, prototyping, and development often in progress all at once across the different development streams [3].
For more information see the following video:
Cardano Wallet
Cardano has released two wallets Yoroi and Daedalus. Daedalus is an open source wallet for ADA, and supports most major desktop operating systems such as Windows, macOS, and Linux. Daedalus is built with web technologies on top of Electron.
It is also important to mention that DAEDALUS [13]:
Is a full node wallet. This means that Daedalus downloads a full copy of the Cardano blockchain and independently validates every transaction in its history.
Also allows theme customisation for the user.
Has newsfeed that delivers news to Daedalus users directly via the user interface.
Yoroi is a light wallet for Cardano, developed by EMURGO [12]. Yoroi is a Firefox, Chrome and Edge Browser extension. But also come as an Android and IPhone client. In the Google Play Store Yoroi has a 4.6 out of 5 rate and 100,000+ installs. Also the IPhone version has 4.7 out of 5 rate in the Apple Store and 217 Ratings.
Cardano User Structure
Typical Cryptocurrencies such as Bitcoin and Ethereum have different types of user base. For example Bitcoin has the developers maintaining the Bitcoin network, the miners, securing the network and the users buying Bitcoin (e.g. supporting the financial ecosystem etc.). Same think happens with Ethereum, but slightly different, because the Ethereum has two type of developers those who maintain and improve the network, just like Bitcoin and those who maintain and create Smart Contracts, increasing the Ethereum use cases. Cardano by adding the Goguen network is increasing the ecosystem complexity and create five type of users, the developers maintaining the network, the developers writing smart contracts, the subject matter experts (that do not know how to code), the miners securing the network (through staking) and the users buying the token.
Below we can see the evolution of the cryptocurrency ecosystem:
Cardano Staking
ADA held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ADA held. The ability to delegate or pledge a stake is fundamental to how Cardano works [1]. In Cardano we can run private or public staking pools, and a calculator is provided to assess the rewards.
Below we can see a screenshot from the Cardano calculator:
Below we can see how the staking mechanism rewards the stakers:
Cardano Architecture
This section describes a high-level architecture of Cardano. It provides details on the core components and their interactions, and briefly discusses Cardano’s eras and implementations. The current implementation of Cardano is modular.
It includes the following components (different deployment use cases will use different combinations of components):
Node
Command line interface (CLI)
Daedalus wallet
Cardano db-sync
GraphQL API server (Apollo)
REST API components
SMASH server
Below we can see how the different components are connected:
Note: For more information on the Cardano documentation, refer to the relevant links [1].
Cardano Repository/Code Assessment
The Cardano repository is frequently updated with excellent documentation. The code looks clean (code coding style), with self explanatory comments. The programming language used to develop the technology is Haskell (Haskell is the main programming language , not the only one). Haskell is considered to be an advanced, purely functional programming language, designed with emphasis on fault tolerance. In layman's terms Haskell allows for the code to be easily verified, and become less error-prone [10].
Note: Also Haskell cannot easily be used to for large scale programming and the talent pool is restricted, becoming a problem in the long run for large scale developer adaptation. It is also understood that this type of programming language will attract people from the academia (e.g. universities, such as Phd students and researchers) and not the commercial market, that is adopted into solving real world problems.
Cardano Security Considerations
Cardano has undergone an independent source code audit (of Phase 1 that includes the Byron epoch) by a respected company named Root9B. The IOHK team wanted to reassure users that Cardano is a secure protocol [8]. Root9B was founded in 2011 as Root9B Technologies, the company touted itself as an IT security training firm staffed by an impressive list of ex-military leaders with many years of cybersecurity experience at the DoD and NSA. But later on, the company, due to bad marketing, received some really negative publicity about, potentially manipulating its own stocks and that led to the company closing [9].
The output of the reports can be found here: github.com. The most important finding was Insecure Genesis Block Generation (which is related with the randomness of the block generation), the issues identified were remediated and verification document was produced by Root9B to confirm that.
Below we can see the report extract about the single Critical vulnerability identified:
Note: It does worth mentioning that there were also identified some other interesting such potential Denial of Service attack etc.
At this point it should be mention that from a quick view in the Cardano repository, it seems that the Cardano team does take into consideration, newly identified security vulnerabilities as the development is progressing.
The screenshot below shows that [11]:
Conclusion
Finally after all this analysis the time has come to say my opinion on what is the verdict outcome. Below you can see the pros and cons based on the information collected:
PROS:
Here are my pros about Cardano:
As far as their business/social presence is concerned from me gets an 9 out of 10. Well designed site, clear businesses goals, strong community, good partnerships.
As far our their technology is concerned from me gets a 9 out of 10. The technologies are carefully chosen and well designed.
As far as the token economics is concerned I will give it a 7 out of 10. The coin inflation is good and incentives staking to secure the network.
The Cardano team has a strong academic background and might make the Cardano goals non realistic.
Very well designed stacking mechanism and decent reward systems, this is a 9 out of 10 staking technology.
CONS:
Here are my cons about Cardano:
Cardano is making use of Haskell, and because of that, the developer adaptation is going to be difficult.
Cardano has prolonged the mainnet release for the sake of quality too long (or maybe not).
Total score is: 8 out of 10 for long term investment and a 7 out of 10 for short term.
This article is going to focus on Mina. Mina besides a sexy female name is also a cryptocurrency protocol using a technology named succinct blockchain technology (developed by Mina). Current cryptocurrencies like Bitcoin and Ethereum store hundreds of gigabytes of data, and as time goes on, their blockchains will only increase in size. With Mina Protocol however, no matter how much the usage grows, the blockchain always stays the same size - about 22kb. This means participants can quickly sync and verify the network [1].
Traditional blockchains require verification time linear in the number of transitions. Mina shows how to construct a succinct blockchain using recursively composed succinct non-interactive arguments of knowledge (SNARKs). SNARKS are used to verify that nobody is cheating or stealing. SNARKs are based on a complicated cryptographic principle called “Zero Knowledge Proofs”. These proofs are essentially used in order to verify that someone has a secret without revealing said secret. We won’t go into too much detail here.
Mina uses a Proof-of-Stake permissioning mechanism known as Ouroboros Praos to reach consensus, which builds off prior work done by IOHK, the company working on Cardano. It was designed to be simple and allow anyone to participate proportionally to the amount of stake in the protocol. Bandwidth requirements are low to facilitate a high level of inclusivity.
Note: Above we can see Mina a famous singer from 1940's.
For those who’d like to learn a little more about Mina Protocol prior to reading this report, here are some primary links:
This article might get updated, so stay tuned, and is meant to provide a holistic overview of Mina Protocol for readers, both old and new.
Mina Protocol Company
The Mina protocol was created by O(1) Labs with the goal of optimising both scalability and decentralisation. O(1) Labs project Mina, formerly known as Coda Protocol, has raised $10.9 million in a funding round co-led by Hong Kong-based Bixin Ventures and Singapore-based Three Arrows Capital. The board members include behind Mina include former Executive Director at ZCash Foundation Josh Cincinnati, Principal of Slow Ventures Jill Carlson, VP of Engineering at Interchain GmbH and Tendermint developer Tess Rinearson, Fund Director and Joint Legal Counsel of International Management Services Sean Inggs, and CEO of O(1) Labs, the team that incubated Mina, Evan Shapiro.
Mina was set for mainnet launch in Q4 2020 but O(1) Labs CEO Evan Shapiro postponed that for Q 2021. Before launching on mainnet, Mina aims to finish its adversarial testnet with over 1,000 unique participants by the end of the year.
Because Mina uses a variant of Ouroboros Proof of Stake, block rewards and fees are distributed approximately pro-rata to current holdings as long as everyone in the network is staking. Therefore, assuming high staking participation, any nominal inflation in the protocol is cancelled out by a nominal return denominated in the protocol, ensuring that accounts’ proportional holdings of the currency remain constant.
However, those who do not choose to stake or delegate will experience dilution relative to those who do. In order to motivate participants to begin staking, Mina’s nominal inflation will begin at 12%. Then, over the course of the first five years, the inflation rate will fall to 7%, and remain at 7% thereafter by default, subject to changes via the chain’s governance
The protocol will target these inflation rates regardless of the staking participation rate. That means that block rewards will change dynamically to target this inflation rate. For example, if only 50% of the network stakes, then block rewards will double. This is because per Ouroboros, number of blocks produced per epoch is expected to be proportional to the staking ratio. This naturally encourages more individuals to stake at low participation rates.
The primary consideration when lowering inflation rates would be determining whether rewards are higher than is necessary to ensure block producers have sufficient incentive to validate without requiring a large increase in fees. Inflation, in the form of block rewards, is used to secure the chain against attacks by incentivizing validation by block producers.
Mina Protocol Social Media Presence
Below we can see the social media stats:
Twitter followers: 35.8K Followers
Telegram: 56573 total members (9211 online)
Discord Members: 13 990 total members (2309 online)
Note: The Telegram community is very active and healthy (e.g. members do not exchange cooking recipes etc.). Same applies for Twitter.
Mina Protocol Partnerships
Below we can see the partnerships based on dates:
[Feb 9 2021] Finoa (a regulated custodian for Digital Assets) partnered with Mina Protocol as the preferred institutional custodian.
Mina Protocol Investors
Below you can see the investors:
Mina Bug Bounty Program
Mina Protocol launched a bug bounty program for the test network, in partnership with HackerOne. 1% of the total supply in token rewards as well as cash have been dedicated to help secure the network, across both the Testworld Adversarial Testnet and bug bounty programs. Bug submissions that have been accepted will be rewarded based on a vulnerability tier system, ranging from Low to Critical. For instance, submissions deemed to be a Critical vulnerability are eligible for a $5000 USD cash reward. There is a pre-identified list of known vulnerabilities that are currently being addressed which are not eligible for bug bounty submissions [3].
Elusive Thoughts celebrates 9 years of blogging about hacking
Elusive Thoughts just created its first non-fungible token (NFT), a digital file whose unique identity and ownership are verified on a blockchain (a digital ledger).
There is a hidden secret in my NFT, please find it.
This article is going to discuss the upgrades of ETHv1.0, more specifically meaning the ETHv1.x updates and how this is going affect the price in the coming months. Ethereum 1.x is a codename for a comprehensive set of upgrades to the Ethereum mainnet intended for near-term adoption. It should be noted that ETHv2.0 (code name Serenity) won't be fully rolled out for another 2-3 years with Phase 0 and Phase 1 due within 1-2 and Phase 2 due sometime in 2022 [1]. So in the short term, as far as the asset price is concerned , there is not point looking into ETHv2.0. ETHv2.0 is being deployed as a separate blockchain so it does not supersede ETH 1.0 which means the chain needs to be sustainable for another 5-10 years [1]. In a few words ETHv1.0 is here to stay for now.
Ethereum 2021 Roadmap Outlook
Back in 2020 Vitalik Buterin tweeted a personal roadmap of Ethereum [3]. Below we can see the image posted by Vitalik.
If we focus in the recently announced EIP 1559 upgrade we can see below the upgrade paths:
As we can see above the promised recent upgrade is related to EIP 1559, which will help ETH 1.x to optimise security, privacy and scalability.
EIP 1559 Upgrade
In simple words the EIP 1559 is a transaction pricing mechanism that includes fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with transient congestion [4]. EIP 1559 essentially resolves a pending problem in the Ethereum blockchain, which is the inaccuracy of gas fee estimates, which results into a fee volatility [5].
Ethereum historically priced transaction fees using a simple auction mechanism, where users send transactions with bids ("gasprices") and miners choose transactions with the highest bids, and transactions that get included pay the bid that they specify. This is a problem due to the fact that miners have an excessive control over the fees and therefore ETH v1.0 becomes too expensive (because the miners want more fees) [4].
Important information: The EIP 1559 upgrade will not reduce the fees significantly, but it will decrease the price volatility. And therefore the ETH price is not going to be affected positively from the upgrade.
The Berlin upgrade
The Berlin upgrade for the Ethereum (ETH) blockchain network is now ready to be deployed. More specifically the complete release schedule is shown below:
Ropsten: Block #9,812,189 — expected 10 Mar 2021
Goerli: Block #4,460,644 — expected 17 Mar 2021
Rinkeby: Block #8,290,928 — expected 24 Mar 2021
Mainnet: Block #12,244,000 — expected 14 Apr 2021
The Berlin upgrade introduces several different EIPs to the Ethereum (ETH) blockchain network.
EIP 2929: Gas cost increases for state access opcodes
EIP 2718: Typed Transaction Envelope
EIP 2930: Optional access lists
Note: EIP-1559 is “NOT in this network upgrade and is slated for later this year.”
Important information: None of the upgrades listed above is related to any significant fee reduction. And therefore the ETH price is not going to be affected positively from the upgrade.
Optimistic Rollups
Optimistic Rollups (ORs) are one type of layer 2 constructions that do not run on Ethereum's base layer but on top of it (meaning this is a layer 2 solution and not an actual upgrade on the ETH 1.x mainnet). This enables running smart contracts at scale while still being secured by Ethereum. Any user that uses a Dapp that is deployed to a layer 2 with an ORs construction can enjoy economic abstraction (eg: fee-free transactions, pay with ERC-20, etc.) and instant transactions [6]. ORs aims to decrease the high transaction fees by orders of magnitude and support scaling by taking computational demands off ETH 1.x chain [7].
Important information: This upgrade is related to a potentially significant fee reduction. And therefore the ETH price IS going to be affected positively from the upgrade.
This type of solution, simplistically talking, is implemented already by numerous other tokens e.g. Matic, unipig.
EIP-3368 Increase Of Block Rewards
EIP-3368 essentially changes the block reward paid to proof-of-work (POW) miners to 3 ETH from existing 2 ETH and starts a decay schedule for next two years to 1 ETH Block Reward. Set the block reward to 3 ETH and then decrease it slightly every block for 4,724,000 blocks (approximately 2 years) until it reaches 1 ETH [8].
Important information: None of the upgrades listed above are related to any significant fee reduction. And therefore the ETH price is not going to be affected directly positively from the upgrade. BUT this upgrade keeps happy the miners and therefore, it seems that the miner pools will stop dumping ETH after the upgrade is agreed by the dev and miner community.
Critical Update
For more information see the videos below sequentially, and you will understand the opportunity cost loss for holding ETH:
The short term out look for BTC can be seen below:
As we can see above there are strong support lines to:
Lowest support line at 30482 dollars
Highest support line at 44816 dollars
As we can see above there are strong resistance lines to:
Highest resistance line at 58072 dollars
Lowest resistance line at 52351 dollars
Fibonacci resistance line close to 63000 dollars
The MACD and RSI oscillators show:
Not very strong uptrend from RSI
Potential uptrend from MACD
Note: Oscillators would have to be confirmed with volume. Currently not sufficient volume exist.
The short term out look for ETH can be seen below:
As we can see above there are strong support line to:
Support line at 1381 dollars
As we can see above there are strong resistance lines to:
Highest resistance line at 2000 dollars
Lowest resistance line at 1834 dollars
The MACD and RSI oscillators show:
Uptrend from RSI
Uptrend from MACD
Note: Oscillators would have to be confirmed with volume. Currently not sufficient volume exist.
Macroscopic Outlook
Dictionaries usually define scarcity as 'a situation in which something is not easy to find or get', and 'a lack of something'. Below we can see the total stock to flow chart for BTC. The Stock to Flow Ratio is a model that assumes that scarcity drives value. Stock to Flow is defined as the ratio of the current stock of BTC (circulating Bitcoin supply) and the flow of newly mined bitcoins. Bitcoin's price has historically followed the S/F Ratio and therefore it is a model that can be used to predict future Bitcoin valuations.
Note: Of course sacristy without demand, does not mean anything.
Below we can see the yearly stock to flow chart for BTC:
Note: Above we can see that the BTC is undervalued.
We can also attempt to model bitcoin price directly with S/F chart. The formula of course has different parameters, but the result is the same and a predicted bitcoin price of $55,000 with S/F 50 after May 2020 halving can be predicted.
Using S/F chart was can make BTC price predictions using the right charts:
Another interesting charts is Bitcoin: Stock-to-Flow Deflection. The Stock to Flow (S/F) Deflection is the ratio between the current Bitcoin price and the S/F model. If deflection is ≥ 1 it means that Bitcoin is overvalued according to the S/F model, otherwise undervalued.
BTC looks like is going to consolidated further more, probably until the end of next week (16th of March 2021), if not more. Both oscillators (RSI and MACD with Fibonacci numbers configuration) show a negative trend reversal for the daily chart. And BTC price candles move below the 21 day moving average, which is bad. A correction down to 30k is also possible.
Also the BTC Net Unrealized Profit/Loss (NUPL) chart looks bad as we can see below:
Also the ETH Net Unrealized Profit/Loss (NUPL) chart looks bad as we can see below:
Note: The ETH NUPL is not very accurate, because it is not easy to separate smart contract addresses to user addresses.
Net Unrealized Profit/Loss is the difference between Relative Unrealized Profit and Relative Unrealized Loss. This metric can also be calculated by subtracting realised cap from market cap, and dividing the result by the market cap as described in this article. The NUPL BTC chart is close to euphoria and this can also be an indicator of a BTC price drop.
Macroscopic Outlook (Months)
In the long run BTC looks good and promising, the short term turbulence, is going to affect the annual BTC ATH, unfortunately. The biggest selling point of BTC is the low reserve in the exchanges, we all are curious, what is going to happen when the exchanges are going to run out of OTC reserves.
Below we can see the BTC reserve reduction:
The BTC reserves for exchanges are not replenished fast enough and we will see a multiple short term outages of BTC within this year, creating multiple instances of short term buy pressure. The bad news is that the stock market is not fully decoupled from BTC or ETH and is going to affect the crypto price action.
Below we can see the ETH reserve reduction:
In a worse case scenario a short term buy pressure for ETH is certain, by the end of the year (especially when the new upgrades get implemented). The buy pressure, according to my opinion is going to be strong enough to help ETH hit very conservatively speaking 5k in dollars.
