Soulbound Tokens for a "Decentralised Society"| BetaShares

Soulbound tokens for a ‘decentralised society’

BY Justin Arzadon | 31 May 2022
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Bitcoin fell slightly once again, but the rest of the crypto market continued to slide at a much quicker pace, increasing bitcoin dominance. Bitcoin has locked in a record-setting eight consecutive losing weeks, and is on track to hit a ninth. At the time of writing, bitcoin is trading at US$29,120.

Ether fell much further, down -9.36% vs bitcoin’s -1.07% over the last week.

Bitcoin’s market cap is down to $553.5B, while the total crypto market has fallen to $1.20T. Bitcoin’s market dominance increased to 45.9%

 

Price High Low Change from previous week
BTC (in US$) $29,120 $30,590 $28,261 -1.07%
ETH (in US$) $1,790 $2,080 $1,721 -9.36%

Source: CoinMarketCap. As at 29 May 2022. Past performance is not indicative of future performance. Performance is shown in US Dollars and does not take into account any USD/AUD currency movements.

Source: Glassnode. Past performance is not indicative of future performance.

News we’re watching

Soulbound tokens (SBTs) for a ‘decentralised society’

Soulbound Tokens (SBTs) could be the hottest new thing on the Ethereum blockchain, according to Ethereum co-founder Vitalik Buterin, who recently co-wrote a 40-page paper explaining Decentralised Society (DeSoc) and SBTs. The tokens would be stored in a ‘Soul’ (private blockchain wallet) as a non-tradable cryptoasset which would hold an individual’s permanent record of ‘merits and attributes’.

Buterin said in the paper: “SBTs are also non-fungible tokens (NFTs) that a person can earn based in part on their job and education history.” Unlike regular NFTs, they’re non-transferable (though people can revoke them if they choose). An SBT would represent a person’s reputation and accomplishments, a kind of “extended resume”.1 NFTs are tradable and act more as a financial asset, while an SBT, Buterin suggests, could resemble something of a Web3-based CV, and serve as a proof of character, rather than a proof of wealth.

JP Morgan remains bullish on Bitcoin

Global investment bank JP Morgan has continued to be bullish on crypto and the price of bitcoin, keeping its target at $38,000, or ~28% above current levels. A note published by the bank’s strategists argued that the correction over the last month looks more like a capitulation, compared to the more orderly selloff at the start of this year. The bank noted that the market downturn has affected crypto more than other alternative investments, and hypothesised that a greater rebound could follow. The note stated: “We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.”

12th anniversary of Bitcoin Pizza Day

The crypto community celebrates international Pizza Day every year on May 22. Less than two years after the launch of the Bitcoin whitepaper by the pseudonymous creator Satoshi Nakamoto, a Florida-based programmer, Laszlo Hanycez paid 10,000 BTC for two pieces of Papa John’s large pizza on May 22, 2010. This was the first time bitcoin was used in a commercial transaction. At the time, bitcoin was worth less than one cent and the 10,000 BTC had a value of $41. Today those same BTC would be worth close to $300 million.”3

On-chain metrics

Bitcoin (BTC): Price drawdown from ATH

Price drawdown from all-time high (ATH) shows the percent drawdown of BTC’s price from the previous all-time high. Bitcoin is extremely volatile and has spent more than 80% of its life in a drawdown of 20% or more. This chart is a reminder of that volatility, and how the current drawdown compares historically.

Looking at data from on-chain analytics company Glassnode, the drawdown from the ATH sits at -58.38% placing it in the Top 5 worst drawdowns in its history, but still considerably less than the -81 to -93% drawdowns that have happened four times previously.

Source: Glassnode. Past performance is not indicative of future performance.

Bitcoin (BTC): Adjusted Circulating Supply

Adjusted circulating supply accounts for lost coins. Lost coins are regarded as those that have not moved in over 7 years. Lost coins are deflationary and act like a coin burn. While they come as a detriment to the coin holder, they benefit the rest of the network by lowering circulating supply.

According to the chart, after accounting for lost coins, there are only 15,264,65 of the 19,0532,031 coins that have been mined to date in circulation.

Source: Glassnode.

Altcoin news

While almost all Top 20 altcoins were in the red over the last week, one of the few coins to have a positive return, and the strongest performer, was Tron’s native token TRX. Over 7.7 billion TRX tokens have been ‘burnt’, being sent to a dead wallet in just 30 weeks4. A token burn is deflationary because it decreases supply as those tokens are no longer in circulation, which is generally positive for the price. As per the Tron website: “TRON is dedicated to accelerating the decentralisation of the Internet via blockchain technology and decentralised applications (DApps). TRX is the basic unit of accounts on the TRON blockchain. TRX is also a natural medium currency for all TRC-based tokens and connects the entire TRON ecosystem, with abundant application scenarios that power transactions and applications on the chain.”5

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.

Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.


1. https://fortune.com/2022/05/26/what-are-soulbound-tokens-web3-buterin/

2. https://news.bitcoin.com/jpmorgan-sees-significant-upside-to-bitcoin-replaces-real-estate-with-crypto-as-preferred-alternative-asset/

3.  https://cryptopotato.com/12-years-since-a-florida-based-programmer-bought-2-papa-johns-pizzas-with-bitcoin/

4. https://coingape.com/trons-trx-burn-total-exceeds-7-7-billion/

5. https://tron.network/about?lng=en

Off the Chain will be published every Tuesday, and provide the latest news on bitcoin and the rest of the crypto market along with analysis and insights into the world of crypto.

It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.

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