The Crypto Ecosystem Portfolio. Sectors
Today I introduce the first part of what I think it’s the portfolio that better represents the whole crypto ecosystem and it’s fast growing trends. It is a complete and well diversified portfolio composed of 80 assets spanning four growing big trends of the crypto landscape.
Interesting projects with powerful applications and use cases which are disrupting their fields. Leveraging all the capabilities of a distributed technology stack.
The portfolio is well diversified both, between categories and market cap. Obtaining thus exposure to low caps with big potential returns while being invested on the fastest growing trends.
In my opinion, the crypto ecosystem distributes itself in four main categories. Currencies (eg. Bitcoin), layer 1 platforms (eg. Ethereum), Data related (eg. Chainlink) and Decentralized Finance (eg. Uniswap).
Coins that serve as a Store of Value or as a Medium of Exchange. Most of them are Proof of Work based and were created during the 2017 bull run or before, by forking Bitcoin’s code and a few parameter tweaks they offered a new and faster coin. In my opinion because of their limited token functionality, use cases and Bitcoins dominance. I don’t foresee an extremely bright future ahead for them. Maybe some privacy coins if regulation doesn’t see them as a financial threat for humanity. Still early. So by the moment I think the safest bet in crypto currencies is Bitcoin and only Bitcoin.
Layer 1 — Smart Contracts Platforms
Blockchain needs layer 1. Needs automation. Needs Dapps. Needs Scalability. And needs interoperability.
These types of platforms can be thought of as different internet layers where to build any type of application. Each one with its own characteristics. TPS, Transaction costs, Consensus, Programing language, interoperability with other chains…
In my opinion Layer 1 are the foundational and building blocks for the future digital and financial economies. Are essential to the well functioning of the crypto ecosystem and they need to be extremely robust and bullet-proof.
Ethereum has established itself as the predominant chain and others so-called “Ethereum killers” might got a little short-handed like EOS and Tron. Even due next generation platforms emerge with powerful narratives like Solana or Polkadot.
As time passes and infrastructure is being built I see clearer the multichain interoperable ecosystem of the future.
Blockchain needs data. But blockchains are siloed to external world data. Thats why oracles where created in order to transfer real world data into the blockchain in a secure and verified manner. Oracles could expand their business to any kind of data if there’s the demand for it. Actually the most used are price feeds of assets like crypto or stocks. Because the ecosystem is highly focused on a speculative market and trading. In the future, with blockchain global adoption they could serve as primary data sources for things like insurance, travel, supply chain, digital identity, logistics…
Other interesting data related fields that are disrupting the top tech business and i foresee a good future for them are: Data Indexing/Querying (Google), Advertisement (Facebook), Cloud Computing (AWS, Microsoft), File Storage (Google Drive) etc. And even new business styles never seen like data value transmision while retaining its custody and privacy. Or even a new distributed and optimized Internet Layer.
Data is the new oil and blockchain is the most efficient method to extract its value and get the best use cases, no doubt.
DeFi is the obvious reason Satoshi created Bitcoin. A financial system without the middleman or central authorities dictating the rules to play. DeFi is a place where users are free to use their assets anywhere and anytime while having full custody.
My investing thesis on defi is thinking about what the average Chad does with their money:
Save (Money Markets & Yield Aggregators),
Spend (Payments, Cards & Infrastructure),
Invest (Decentralized Exchanges & Synthetics).
Send. Thanks to blockchain you can send anytime, anywhere.
And some kind of money like the $USD to transact on. (Stablecoins).
That should be DeFi, and in my opinion the world is going to adapt it, new clever ways of capital efficiency are going to be discovered and the world could run on top of DeFi infrastructure.
Having stated already the four types of coins that I invest in and think better defines the crypto world currently I will present the crypto ecosystem portfolio.
Based on a risk/reward framework considering diverse metrics like its potential and market cap, I have assignated to each project an allocation, ranging between the 0.5% and 2–2.5%.
Followed by a list of all assets with a link to their website to better start understanding each one. In the future I will write a post explaining briefly each protocol and their addressable market and why I think it needs a place on the crypto ecosystem portfolio.
The Crypto Ecosystem Portfolio. Assets
If you haven’t read part I (Sectors) of the series, you should keep an eye on it.