To complement our monthly "Under The Hood" where we go over what happened in Crypto and the Autopilot, we offer a deeper dive on background and performance on a selection of the crypto assets that Autopilot was holding.

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As per the last monthly snapshot of the portfolio we looked at, the Autopilot was holding: BTC: 35.9%; BNB: 14.1%; KLAY: 11.7%; NEAR: 11.6%; LUNA: 8.7%; ATOM: 7.1%; GALA: 4%; CELO: 3.7%; ONE: 2.2%; IOTX: 1.1%

We've covered them all before on the blog and podcast with the exception of those 3: Klaytn ( KLAY ), Cosmos ( ATOM ), Harmony ( ONE )

Klaytn ( KLAY )

Klaytn is a Korea-born and now Singapore-based public blockchain aiming to be "enterprise-grade and service-centric" and employing a bit of a hybrid model to be both distributed and fast. It achieves this by being secured by other companies that get together to create decentralized trust.

It was launched by GroundX, a subsidiary of the Korean mobile platform Kakao, in 2019. Stewardship was then handed over to the Klaytn Foundation so it could expand globally and further decentralize.

So it's not quite as public and decentralized as Bitcoin or Ethereum, but it's not entirely closed either.

A lot relies on the "governance council", but it does have the MakerDAO on its board, so it's truly a hybrid setup.

It's currently focusing on the opportunities of the metaverse, gamified finance, and the creator economy.

Interestingly, GroundX and Consensys are leading the effort to pilot the CBDCs in Korea. It is being trialed on a private version of Klaytn.

The token - KLAY - is used to secure and run the Klaytn protocol. With 30 nodes and only 3 you can publicly stake to it definitely doesn't feel permissionless, but it didn't completely fail like most "enterprise blockchains" that produced nothing but proof-of-concepts in a vacuum, so it's worth keeping an eye on. It probably found a niche.

You can find a lot more information in their recent light paper describing positioning and ambitions.

10B Klay tokens were created at the genesis and 300 million are created yearly. So the total supply is currently around 10.7B tokens. According to verified data, there appear to be 2.63B tokens in actual circulation.

If you want to give it a try, you can access it all from good old Metamask.

Klaytn Funding

Klaytin raised $90M during its initial coin offering in March 2019 from 3 investors.

But of course, like most layer-1 blockchains, Klaytn's resources probably lie in the Klaytn tokens they are holding, more than any initial funding rounds.

They have a $300M Klaytn growth fund, and with 54% of the block rewards being allocated to that fund at every block - if the price stays constant - they will have a budget of about $150M a year to drive the ecosystem growth.

With $36M in Klay token from block rewards being set aside for tech development, they should also be able to finance "research and development for better technology, or projects that contribute to the overall growth of the ecosystem" somewhat comfortably.
For Klaytn token holders, the fact that the annual issuance is very large, that the ownership is quite concentrated and that the foundation most likely needs to sell tokens to finance its growth means that Klaytn is probably a bit of a risky play. Indeed, as the token greatly appreciates in value, there might be a strong incentive from the foundation to diversify a part of its treasury, thereby putting downward pressure on the price. And, looking at Messari data on circulating supply, it does seem like that has expanded with sharp spikes recently.

But it’s definitely an interesting experiment.

Why is Klaytn ( KLAY ) whitelisted as an investable asset for Autopilot?

Klaytn is a layer one blockchain with EVm compatibility. Those are our favorite types of assets, because of the fat-protocol thesis.

We don't usually like "corporate" or "private" blockchains because they barely have any tokenomics. Klaytn, however, does offer an interesting approach, so we thought we would give it a chance. Indeed, there is some value capture possible for tokenholders through increased token demand & some possibility to stake and make an 8% return by securing the network.

It was first whitelisted in July 2021 but only made a meaningful appearance in January 2022.

With a market capitalization of about $3B, it is ranked as the 46th largest crypto, but it is the 14th largest smart contract platform & the 8th if you only consider blockchains that present themselves as "Enterprise Solutions".

Klaytn ( KLAY ) Market commentary

It's no secret to anyone who's been half paying attention to the crypto space that NFTs and "the Metaverse" are super hot topics right now.

Klaytn plays right into that. And since it has had partnerships with big brands since the beginning, it offers a relatively safe space for those brands to start experimenting.

The signature of 5 key partnerships announced at the same time as their 2022 global expansion roadmap has likely contributed to the recent price increases. Their partnership with Animal Concerts is probably the one that got the most attention.

KLAY has done fairly well over the past year, returning about 113% in BTC and 90% in USD. Much like the rest of the market, it's not quite at its all-time high but it did regain its level of February 2021.

Cosmos ( ATOM )

One of the most interesting assets out there, Cosmos is a network of sovereign blockchains that communicate for safe data and value exchange via IBC, an interoperability protocol built after TCP/IP.

In short, it's "the internet of Blockchains".

The Cosmos Hub, commonly known as "Gaia," is a proof-of-stake chain with its own native coin, ATOM, that acts as a hub for IBC packet routing throughout the Cosmos network's blockchains. The Cosmos Hub, like the bulk of the Cosmos network's blockchains, is protected by Tendermint, a Byzantine Fault-Tolerant (BFT) Proof-of-Stake consensus method.

The network's beginnings may be traced back to 2014, when Tendermint, a key contributor, was created. A white paper on Cosmos was released in 2016, followed by a token sale. ATOM tokens are earned by a hybrid proof-of-stake algorithm, and they secure the Cosmos Hub, the project's main blockchain. This cryptocurrency is also used to administer the network, through governance.

Cosmos is quite interesting because its design solves the "blockchain silos" issue, as all the blockchains of the Cosmos ecosystem can talk to each other. And it also makes it much easier to launch your own blockchain with the "Cosmos-SDK". Today, there are quite a few successful Cosmos-based chains: Terra, ThorChain, Crypto.com chain, Oasis Network, e-money, Secret Network, and Regen Network. To name a few.

In April 2021 they fully launched IBC - the inter-blockchain communication protocol - and have been hard at work connecting everything they can to it. You'll find more information here if you want the details.

And do watch the Cosmos here. It's fun.

COSMOS Funding

Tendermint Inc and Interchain Foundation are the two major entities responsible for developing and promoting the Cosmos tech: "Tenderming Core" and the Cosmos SDK.

It's Interchain Foundation that ran an ICO for ATOM in 2017 and used the proceeds to develop the tech and launch the first blockchain, Cosmos Hub in 2019. They raised US$ 17M during the ICO (where they sold 1 ATOM for 0.1 USD), but didn't sell all of the crypto and ended up with quite a bit more.

Cosmos has been in the works since 2014 and has been remarkable in its tenacity to deliver against its vision, even when it had a hard time getting traction. Seeing that they only delivered IBC in 2021 (5 years after it was first presented), it's understandable that some people lost faith along the way. But now that it's there, it's incredibly promising (a little like the Polkadot Parachains).

Why is Cosmos ( ATOM ) whitelisted as an investable asset for Autopilot?

We like Cosmos because it's a layer 1 blockchain, but with a twist. The vision of making it easy to launch "vertical specific" blockchains (such as Terra, or Regen Network) and to allow all of them to easily connect to each other is compelling. And so was the delivery.

ATOM is the native coin of Cosmos Hub, a PoS blockchain that is one of the Cosmos network's many hubs. The fundamental objective of ATOM is to ensure the security and long-term viability of the Cosmos Hub network, as the PoS consensus mechanism requires validators to hold ATOM in order to participate in the validation process.

Owners of ATOM tokens can stake them to ensure network security in exchange for a share of the network transaction fees and block rewards distributed for validation. The token is also required for participation in the governance of the Cosmos Hub.

Staking rewards on Cosmos are calculated dynamically to ensure enough tokens are participating. When the participation ratio is 67%, inflation is at its floor of 7%. Should less than 67% of the tokens be staked, the rewards can go up to 20% to attract more capital to work on the network's security.

ATOM has been considered desirable since June of 2019 when we first set up the list. It has however barely ever been held by the Autopilot in 2021 and only made a meaningful appearance at the start of this year.

Cosmos ( ATOM ) Market commentary

Much like everything else, the price of ATOM has suffered quite a bit recently and it is down from its highs of September 2021, to about where it was in May of 2021 before the little crash. But for the long-term investors, at its current US$ 27, it's still a nice appreciation from its ICO price of US$ 0.1

Over the past year, it has done better than either fiat or Bitcoin.

For more news on the expansion of the cosmos ecosystem & the IBC, you should read their post of December 2021: here. Just a note: while that article counted 25 active "Zones" (blockchains) connected to IBC in December, there are now 37. And the number of active channels has gone from 198 to 287. It's quite a growth in about 2 months.

Harmony ( ONE )

Harmony is a smart-contract platform out of Silicon Valley. To support quick transactions, it employs a technique known as state sharding, which divides a chain into parts that execute transactions and store data in parallel. Harmony presently supports a thousand nodes distributed across four shards that work in unison to generate new blocks every eight seconds (no threat of a competing fork). In the future, the project intends to create more shards and support more nodes. The protocol's Effective Proof-of-Stake (EPoS) staking mechanism allows token owners to delegate their holdings to network validators while also attempting to reduce delegated asset centralization.

"One" is used to secure the network and pay for transactions.

It was founded in 2018, launched in 2019 and opened in 2020.

It currently has a thousand nodes, with 640 managed by the community. The rest is managed by the foundation but collects no rewards. The plan is to increasingly put the power in the hands of the community.

Harmony Funding

Harmony raised US$ 18.3M "privately", then another US$ 5M from a "node" round led by Binance Labs, followed by a US$ 5M Initial Exchange Offering with Binance.

The VCs who bought in the "private" sale bought 2.82B tokens for $0.0065 each. The node round bought 506M token for $0.01088 each and the public bought 1.57B token for $0.003175. This means that the public got a better deal than the VCs; which is unusual enough to be highlighted.

There are currently about 11B "one" token in circulation, each worth about US 0.19.

Why is Harmony ( ONE ) whitelisted as an investable asset for Autopilot?

Harmony is a smart-contract platform, like the other two assets presented previously, and we like it for just the same reasons.

It had been considered for inclusion in May of 2021 but we only whitelisted it in October of that year because the holdings were too concentrated by a few wallets before that. Holdings are always concentrated with new assets but Harmony seemed to be particularly so. We therefore preferred to wait before giving the green light.

It didn't meaningfully appear in the portfolio before January of 2022.