2020’s Crypto shakeup is creating some big winners and losers

  • Bitcoin and the crypto market continues to show great volatility.
  • Experts think that especially those projects that have a high scalability can survive.

When the dust has settled on 2020, the crypto projects left standing will be leaner and keener than their former peers. They may also be luckier, for success is not awarded on merit alone; sometimes you just have to stay alive long enough to profit from your enemies faltering. Just ask all the pizza shop owners whose takeaway business was flagging two months ago and now the phone won’t stop ringing.

In crypto, it’s better to be good than lucky – forget what the adage says to the contrary – and the projects still seeing demand 12 months from now will have done more than merely stay alive: they’ll have shipped products that yield benefits today in the here and now, not in some far-off future when the entire world has adopted crypto. For a sense of whom this year’s big winners and losers may be in the crypto space, one need only look to layer two scaling, where a changing of the guard appears to be underway.

Matic win the scaling race

More than a dozen Ethereum scaling proposals have emerged in the last few years, starting with Plasma, proposed by Vitalik Buterin and Joseph Poon. Like most of the solutions that followed, Plasma introduced the concept of a sidechain – or secondary layer – to handle high-volume network demands made by decentralized applications (dApps). While Buterin and Poon’s original Plasma conceptualization never came to fruition, it’s since been adapted by other projects, and it is two of these baton-takers, Matic and Loom, that capture the mixed fortunes of crypto projects right now.

Loom is the longer established of the two Plasma-based scaling solutions, but it’s suffered some recent setbacks. Several Loom-based dApps have announced their intention to migrate to Matic, with one having already made the transition. Loom validators aren’t happy with the pittance they’re receiving for contributing to the network, either prompting some services to shut down.

Matic, meanwhile, is moving in the opposite direction, having attracted 50 dApps to its ecosystem already and 500 validators to its testnet staking event, Counter Stake. All of which augurs well for its mainnet launch, which is scheduled for next month. The addition of features such as Plasma smart contracts, and a relay pool to eliminate the need for ETH when making transactions, ought to extend Matic Network’s advantage when its mainnet goes live.

Crypto lending receives a shake up

Lending is another sector where there are destined to be some major winners and losers when this storm has blown over. The sector has become increasingly crowded, with too many players offering indistinguishable products. One company that’s bucking this trend, and offering something genuinely unique within the lending space is Pokket, a fixed deposit service that pays users interest on their crypto.

The interest rates it pays out are adjusted according to market volatility, with any interest due paid out after seven days in TUSD. This structured financial product presents a smarter, more agile alternative to the fixed-rate interest offered by other companies. It should help Pokket become a major player in the next phase of the crypto industry’s evolution.

Crypto companies are forced to shed fat

The crypto companies that make it through the turmoil of 2020 won’t just have succeeded with product-market fit: they’ll also have cut costs to a minimum. Mining operation Bitfury is reported to have laid off 25% of its workforce this year, while media company Bitcoin.com has reportedly shed up to 50% of its personnel, with executive chairman Roger Ver promising a “leaner more guerrilla team.”

Other crypto companies, however, are bulking up as they plot global expansion, with Binance seeking to recruit dozens of new staff. Elsewhere, staff at one blockchain company have been forced to take a 30% pay cut to reflect the new economic reality.

When the market performance of the top 50 crypto assets for the year to date is examined, it’s clear that many altcoins are hurting. While price does not correlate perfectly with project performance, it’s evident that the incoming recession will claim a few crypto scalps. Assets like VeChain’s VET, 0x (ZRX), NEO, and Maker (MKR) are all deeply in the red for the year to date, and with diminished returns comes diminished community confidence. For those projects that emerge on the other side intact, the experience will have been formative. If they can survive 2020, they can survive anything.

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