Get to know: LUNA, ALGO, and NANO
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.
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If you want to learn more about Polygon, Solana, Cardano, Axie Infinity, Celo, Hedera, Theta, or Waves you can check out the articles from the past 2 months.
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Terra(LUNA) is one of the most interesting chains out there partly because it did not follow the traditional path of launching a smart-contract chain nor does it want to do what typical chains want to do. It has been created in order to facilitate the adoption of Crypto by creating digitally-native assets with stable value. In other words, it creates stablecoins that are not backed by fiat but pegged to it. It wants to be stable & programmable money for the internet.
It has bootstrapped its creation by targeting the e-commerce payment use case first. It first became useful for payments and then morphed into something on which more powerful products can be built; as opposed to other chains who released a very elaborate tech but didn't exactly know what the use cases would be.
It started by being mostly focused on the Korean Won and the Mongolian Tugriks but quickly turned its eyes towards the US dollar and is now promoting its USD-pegged stablecoin, UST.
It's aiming to become the largest stablecoin in crypto, as it believes it solves a lot of the problems that fiat-backed (such as Tether or USDC) or crypto-backed coins (such as Dai) present.
Do Kwon, Terra's co-founder, said "The stablecoin is the most important product in crypto, uniquely serving the currency function of cryptocurrencies." and he believes that for true decentralization and censorship resistance to happen that stablecoin needs to be decentralized. And following that vision, Terra wants its "product", UST, to be as widely used as possible and so has gone to great lengths to make sure that UST is available on multiple chains. Today it is accessible on Ethereum, BSC, Harmoney, Solana, and the whole Cosmos ecosystem through IBC.
So it's a whole blockchain dedicated to making stablecoins which can then be taken everywhere in Crypto. And it can also be used to create other things.
The Market Capitalization of UST has gone from pretty much nothing in November 2020 to US$ 2.88 Billion in November 2021 and is trading around US$ 100M a day.
LUNA is used to secure the network through Delegated Proof of Stake (PoS) and pay for transactions. Interestingly, a lot of projects launching on Terra also offer "airdrops" to Luna stakers, which is a nice, non-planned aspect of staking the token today.
LUNA's market capitalization went from about US$ 80M in the summer of 2020 to US$ 21B in late 2021.
To read more about the treasury, the tokenomics (and how they were recently changed to accompany the growth of the chain), and how Terra is building its own insurance pool from part of its treasury, read the "Columbus-5 mainnet upgrade news" by Terraform Lab's famous intern.
Why is Terra(LUNA) whitelisted as an investable asset for Autopilot?
Terra has one of the clearest visions and best executions of all layer 1 chains. It's also one of the most original where it creates a whole Layer 1 Proof of Stake Chain with robust economics with the sole purpose of making decentralized stablecoins sustainable and inter-chain. The team has shown a remarkable ability at developing avenues for their stables to be used, such as the incredibly-appealing Anchor protocol that offers a 20% stable yield for lending UST.
And while it focused a lot of its efforts and marketing on UST - because that's pretty much the only stable value in demand in DeFi - it can just as easily create a Korean Won, a Euro, or a Standard Drawing Right (which sounds like the best currency to be paid in if you are a Digital Nomad). If it has an oracle price feed, it can be turned into a Terra Stable.
LUNA has often been on our watchlist since late 2020 and has been whitelisted since mid-February 2021. It has often been held by the AI since then and has contributed positively to its performance, especially in March of 2021.
Terra(LUNA) market commentary for October 2021
Layer 1 blockchains and use-case-specific blockchains have been doing pretty well for a couple of months, in general.
With regulators looking closely at centralized stablecoins, their decentralized brethren are enjoying some newfound popularity.
Additionally, the Columbus 5 upgrade of late September mentioned above has allowed Terra to really go inter-chain and it looks like it could have a real shot at becoming the favorite stablecoin issuer of the metaverse.
That took the LUNA price to a new all-time high in early October which it passed again in early November to climb above the psychological bar of US$ 50. This time last year it was worth US $0.3
TerraUSD is now the 5th largest stablecoin and the second algorithmic stablecoin after DAI.
It is also the fastest growing stablecoin of 2021 and has been the best stablecoin when it came to actually being stable in the flash crash of May 2021.
As if powering the fastest growing algorithmic stablecoin and taking it interchain wasn't enough, the Terra chain is also now a host to a large ecosystem of DeFi and NFT dApps. And it really has the #LUNAtics all fired up.
Algorand is a Layer 1 (L1) PoS chain that supports smart contracts. Like many of today's L1 contenders, it is aiming for higher throughput and boasting a "greener" profile than Ethereum - it claims to be carbon negative. It was founded in 2017 by an MIT professor and the mainnet launched in June of 2019.
Algo is used to secure the network and pay for network fees. It's also used in governance. It's tokenomics 101.
Algorand raised US$ 66M prior to its ICO in 2019 and another US$ 60M during its ICO.
It recently announced that it would spend US$ 1B to support its ecosystem growth.
Why is Algorand whitelisted as an investable asset for Autopilot?
As a scalable, green, PoS, and well-funded L1 chain, Algorand has a lot going for it. It is today the 7th largest Smart-Contract platform and the 21st largest crypto asset. It doesn't make the headlines quite as often as some other projects do, but it is coming along nicely.
In terms of price action, it is up over 5 times since last year, though it hasn't recovered from its all-time high of 2019. But with the trend it's on, our trend forecaster actually gives it a good shot of recovering that high in 3 to 6 months.
The autopilot, of course, doesn't care and only looks at the past.
But since the 2 AI agree, for different reasons, that it has an interesting profile, who are we to argue. The Autopilot likes it for its past stability and the trend forecaster thinks it should do well based on recent trends.
Algorand Market Commentary for Octobre 2021
Like everybody else, Algo has been knee-deep in NFTs lately. And since Algo kind of defined itself as "for DeFi" in 2020, there were quite a lot of DeFi Protocols launching too.
USDC, aiming to be just as cross-chain as Terra does, also launched on Algo in early November as USDCa.
And just like everyone else, they also had some Gaming Projects.
It's hard to see where Algorand is really leading the charge as an L1 smart-contract platform, but it is undoubtedly a very good "fast-follower". You might feel we're not as excited about Algo as we were about Terra, and you'd be right. But we'd love to know why we are wrong and you should definitely reach out to us to let us know.
NANO (formerly RaiBLocks, XRB),uses a different blockchain architecture known as directed acyclic graph (DAG) and aims to be light and fast so as to be able to tackle micro-payment use cases. It started in 2015 and was distributed for free through a faucet.
Nano's aim is to be a far more sustainable Bitcoin-like cryptocurrency, and on the surface it offers many benefits that users would appreciate. It is free of fees, transactions are instantaneous, and it can scale infinitely.
The network is secured through Proof of Stake but it is done on a voluntary basis and is not rewarded. All the NANO that was created at the beginning is all of the NANO that will ever exist. There is no new issuance.
Its value is a social contract.
NANO is the 16th largest crypto with a "currency" use case and the 131st overall in terms of Market Capitalisation.
You can check out the ecosystem for NANO at https://hub.nano.org/
Nano got its funding at its creation. 7'000'000 NANO were awarded to the developer fund.
Why is NANO whitelisted as an investable asset for Autopilot?
A little like the better-known XRP, NANO targets the instant payment use cases with a non-stable asset. Since the payments are instantaneous and fee-less, this makes it actually realistic. If the cost of exchanging NANO is less than the cost of transforming it to Fiat it might make for an interesting alternative to international payment rails. With stablecoins popping up left and right they might have a bit of a steep competition, but for cross-currency transfers, going through a "neutral" intermediary, that might be interesting.
NANO has been in the investable Universe since May 2021 and has been in the portfolio for the past 3 months. Its performance trailed that of Bitcoin a little bit, but mostly because it hasn't done well in September, because it outperformed Bitcoin's performance in August and October.
NANO Market Commentary for October 2021
NANO hit an all-time high of USD 20 in April of this year before plunging to USD 3 in July and is still down 74% from the April high point. It is however up over 6 times since a year ago.
Nano is now mostly working on its adoption roadmap, as technically it is pretty stable.
Chief Development Officer
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October has concluded so we wanted to let you know what the month looked like for your Crypto Autopilot and provide a long-term outlook according to our model account. You can also check out additional insights within the app on the Autopilot page.