Get to know: AVAX, SAND, and LRC

DateDecember 07, 2021
Reading Time13 min
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Mathieu Hardy
Chief Development Officer
To go alongside our monthly “Under The Hood” article 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.

If you would rather listen to this than read it, it's on our podcast and our youtube channel.

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This month the autopilot was holding the following: BTC: 34.4%; CELO: 11.4%; SOL: 9.8%; TFUEL: 8.8%; AVAX: 6.7%; AXS: 5.6%; MATIC: 5.2%; ALGO: 4.3%; HBAR: 3.7%; SAND: 3.%; LRC: 2.6%; WAVES: 1.8%; EGLD: 1.6%; ADA: 0.9%

Amongst those, we will dive deeper on 3 we haven't yet looked at: Avalanche (AVAX), The Sandbox (SAND) and Loopring (LRC). Forgive us if we sound more excited about SAND than we do AVAX, it's not that AVAX is bad but it's "another layer 1 contender" and there is only so much one can get excited about layer 1. SAND is kind of the shiny new thing. We like new things.

If you want to know more about other assets, you will find deep dives about Algorand, Terra and Nano here, TFuel, Celo, Hedera and Waves here,  and Solana, Cardano, Matic and AXS over here.

You can find all this, and more, in our Podcast too.


Avalanche - AVAX 🔺

Avalanche is a smart contract platform aiming to compete - but be compatible -  with Ethereum by offering something more scalable and customizable thanks to "subnets" which can go as far as creating private blockchains. It is relatively young as it only launched its mainnet in September of 2020.

The token -AVAX- has a fixed supply and is used to pay for transactions fees and to power the consensus process.

The Avalanche chain uses a bit of an a-typical setup because it has a primary network that secures 3 built-in blockchains: one for creating and trading assets, one for tracking and coordinating subnets and custom blockchains, and one to facilitate the creation of smart contracts. That leads to a user often having to bridge their assets from one chain to another, which is a bit weird.

What's possible with Avalanche?

Avalanche Funding

AVAX, through the Avalanche Foundation, has raised about 300 million dollars. Some 200 million recently, some 60 million through seed,private and token sales. All in all, financially it started well. But you do need money to take on Ethereum's popularity.

They are backed by, amongst others, Galaxy Digital and Bitmain.

Why is Avalanche Whitelisted as an investable asset for the OSOM Crypto Autopilot?

Avalanche is a "layer 1" contender, attempting to improve scalability without making compromises on decentralization but being modular enough that you can create rules for somewhat permissioned blockchains.

As we've said before in these deep dives, we like Layer one protocols because of the Fat Protocol Thesis - the idea that a layer one blockchain can capture some value from everyone that build on it and that it is, therefore, de-facto a less-risky bet than a single decentralized application, the same way investing in the Apple App Store is less risky than investing in one app on the Apple App Store.

Since Avalanche has seen quite a bit of traction in the past year and has excellent VC backing, we thought it deserved to be included in the investable universe. It faces strong competition from Ethereum Layer-2 such as Polygon or ZK-Sync and alternatives such as Solana, the Polkadot para-chains &  the cosmos ecosystem but it does have some unique features which gives it a good edge.

AVAX had been on our radar since late 2020 because it has an interesting profile. It had been added to the investable universe in February 2020 and had almost immediately been added to the portfolio but had not stayed in for long and has only been meaningfully re-added as of November 2021.

Avalanche Market Commentary for November 2021

Layer-1 blockchains attempting to solve the scalability problem of Ethereum have been doing pretty well over the past year. And like Solana, Binance Chain, Cardano, and Polkadot (all in the top 10 largest crypto assets by market capitalizations), Avalanche (12th by market capitalization as we write this article), Avalanche aims to address those issues.

As of November 2021, without looking at stablecoins and meme-coins, Layer-1 contenders are the "hot" item if we use market capitalization as an indicator. Indeed, they occupy the entirety of the top 20 and the first decentralized app to be found in the list is Uniswap, in the 20th place.  

The DeFi darlings who were the hot item of last year, in comparison, while having done very well for themselves have all fallen in the ranking by market cap.

Aave, 27th by market cap on Dec 6, 2020, is now at 58th place even though its market cap doubled.

Compound was 39th a year ago and is 79th today, even though its price doubled and market capitalization tripled. 

Sushiswap was 51 and now 114th even though its market cap also doubled. Yearn was 33rd and is now 105.

This goes to show how "top of mind" the scalability and fee problems are for the participants in Web 3. It's, therefore, no surprise that the price of AVAX went from € 2.7 at the start of the year to over €120 today. Quite a way from its ICO price of 50 US cents. Based on its past year of growth, the trend forecaster at OSOM Insights has it at about €150 in 3 months, but of course, past performance is no guarantee of future performance, especially in such a young field.

The Sandbox(SAND)

The Sandbox - SAND

The Sandbox is a virtual world. It's bang in the middle of the "Metaverse" narrative. It's a "place" where players can build, own, and make money off of their gaming experience using NFTs (amongst which, LAND, which represents real-estate) and the platform's utility token: SAND.

It's actually a pretty old project since it started in 2012 on mobile platforms and has been downloaded about 40M times. Then, in 2018 it started developing a 3D multiplayer version of the game on Ethereum to offer a real virtual and ownable world.

It's in Alpha until Dec 20 and, judging by the fact that a ticket to participate in the Alpha is being resold for about US$ 8000, it looks like people really want to try.

The Sandbox landing page

The Sandbox Funding

The Sandbox has raised about 100M to date, with the bulk of it raised recently and counting Softbank amongst its investors.

Why is the Sandbox whitelisted as an investable asset for the OSOM Crypto Autopilot?

The Sandbox is today the 3rd largest asset in the "Metaverse" category. And since Facebook has rebranded to "Meta" to distract the world from all its troubles, that category has been doing pretty well.

The only projects that are larger, by market capitalization, are Decentraland and Axie Infinity. Taken together, Decentraland + Axie Infinity + The Sandbox account for about 15B euros in market capitalization, and their assets are traded to the tune of over 3B € a day.

"The metaverse" - while still a somewhat nebulous concept - is an interesting investment category as it is definitely interesting to own a piece of the world or a piece of the "verse" where people are going to be spending an important part of their time. Metaverse propositions like SAND can be seen as the community-owned & community-built version of Roblox or Minecraft. And if you get a lot of players because you're a fun place where to hang out and then give all your players an economic incentive in your success, you're likely to do well over the long term.

The Sandbox has been on our radar since the middle of the year but really just entered the investable universe in November 2021. The Autopilot immediately took a position in SAND.

The Sandbox Market Commentary for November 2021

As we said above, the Sandbox is surfing on the "Metaverse" trend that was put into overdrive by Facebook's announcement of its rebranding. While builders had been building "metaversial" proposals for a while, Facebook really shone a light on the space, which helped it attract further investor interest.

Axie Infinity showed what "play-to-earn" could have as an appeal and many are seeing the opportunity to package together the appeals of gaming and DeFi together. Now that alternatives exist to the problems of Ethereum L1 (and The Sandbox is going to move to Polygon soon), those ideas become possible to execute.

Many investors and analysts in the space are seeing those developments as potentially huge for crypto in general. Indeed, games have always been a great way to onboard people onto new tech, get them to familiarize themselves with new interfaces, and explore the possibilities. From Prehistorik that got some of us to learn how to use the CLI to launch games on DOS playing Snake on your Nokia 3210 to Candy Crush on iPhone, games have always been an integral part of getting tech adopted.

Therefore, after the pure "tech wonders" that got the engineers on board, ICOs that got entrepreneurs all excited, and Decentralized Finance that got the finance wizards to join the blockchain, (financially incentivized) gaming could very well be what brings a lot of the folks from the late majority, thereby helping to cross the chasm.

"Gaming" and "financial incentives" might feel like two things that are at odds, but there is a world of "e-sports", so there is probably space for some "professionalization", just like in regular sports. No one said your daughter would enjoy playing soccer on Wednesday less because there is a Ligue 1.

Returns for SAND this year are 1400% so, while it isn't the year's best-performing token, it's definitely one to watch because - as of Dec 8 - the two best-performing tokens year to date are the PieDAO NFT MEtaverse NFT Index (PLAY) and the GALA token from Gala Games.

So, SAND is surfing a really hot trend, has plenty of experience, and with gamification and marketing experts, a very good chance of building a good "honey pot" for gamers. It might very well end up being a category winner.


Loopring - LRC

Loopring is a Layer 2 solution based on zkRollup that aims to scale Ethereum when it comes to trading and payments  

We have talked about Polygon(MATIC) before when talking about Layer 2. This is different.

The ZK in zkRollup stands for "Zero Knowledge". Zero Knowledge proofs are complete math wizardry that allows you to prove that something is true without needing to show the proof. Like how you can prove where Waldo is without pointing him out in the book. Unless you're very good at math, that's probably as far as you can take it before your brain starts to hurt, don't feel bad if you can't hold all the thoughts at once in your head, we can't either.

The "Rollup" means that the scalability is increased through mass transfer processing rolled into a single transaction. This allows to massively save on transaction costs.

Because Loopring has the best description of their token that we have ever seen for a token, we will not even bother to try and rephrase it for you and will simply quote it from their website:

"LRC is the Loopring protocol token, used to incentivize protocol-desirable behavior from liquidity providers, insurers, and DAO governors. Protocol fees come from Loopring L2 economic activity and flow into productive Loopring network participants and into LRC itself". More on tokenomics can be found on their blog.

Loopring essentially offers the infrastructure you need to run a decentralized version of Binance. A bit like DxDy but not relying on synthetic assets. Because performing on-chain all the steps a centralized exchange performs would be prohibitively expensive or even impossible. But as Loopring can move some of the computation off-chain and use ZK proofs, it can retain the "trustless" properties while enjoying the off-chain speeds.

Loopring Funding

Loopring started in 2017 and raised about US$ 45M in ETH through its ICO. But because regulations tightened around ICOs at the time, the Loopring team returned 80% of the proceeds and continued developing by using the remaining of the proceeds.

Why is Loopring whitelisted as an investable asset for the OSOM Crypto Autopilot?

We love Layer 1's but Ethereum suffers from congestion. In comes layer 2. We also love layer two as we think they still warrant the application of the "fat protocol thesis" (see above in the Avalanche section).

Loopring's key value proposition is the cutting-edge cryptography it has to offer. Because zkRollups are really hard. 

Of course, there are competing solutions (xDai, Matic, Optimistic Rollups, Plasma), but ZK offers a lot of advantages and even seems to be Buterin's preferred option. (more here).

So we've liked it from the beginning and it fit all our qualitative requirements. The recent price action made it a candidate for inclusion in the investable universe, so we proceeded with whitelisting it. 

The reason for the price action - as you can read in the following paragraph - does make it a slightly risky bet but it looks like the algorithm is aware of that (without having a clue about what's actually happening) as it has taken a relatively small position.

Loopring Market Commentary for November 2021

LRC was issued for US$ 0.06 and after reaching almost US$ 2 in early 2018 it crashed and spent most of the crypto winter (from mid-2018 to mid-2020) below its ICO value. With the strong need and the promises now offered by Layer 2, it has seen serious interest since early 2021 with a sudden spike in interest in Q4.

Also, from the rumor mill, it seems like there are speculations that Gamestop might partner with Loopring. It looks like there are some mentions of Gamestop in Loopring's code and that that might hint at a gamestop-Loopring partnership for an NFT platform. There are other rumors that hint at the fact that Loopring might start getting involved with the Metaverse.

It's probably a bit risky to take a position in LRC right now since a lot of the price action seems to be "rumor based", but that's why we like to leave it up to an algorithm to manage the portfolio: we don't need to sweat it.

(a) This is not investment advice, nor a solicitation. Crypto markets possess a high level of risk, including volatility and regulatory uncertainty. Past performance does not constitute a guarantee of future results in any way. You are solely responsible for doing your own financial, legal, tax, or investment research before taking any actions. (b) Past performance is no guarantee of future results. (c) Be sure to check the list of countries we accept before signing up and sending us your assets.

All quoted performance of OSOM solutions is before performance fees. And past performance is no guarantee of future returns.

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Mathieu Hardy
Chief Development Officer

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