Auction Pricing of Location & Scarcity
[0A] — Auction 1
Given that world building is a key part of the Decentraland experience, I wanted to test out whether buyers took into consideration the “hot-spot” location proximity as a motivating factor. Let’s assume that landmarks (the roads, districts, and the genesis block) might serve as these points-of-interest. From the smart contract metadata, we can filter the price paid for parcels by their distance to the different classes of landmarks.
- Filter parcels by distance to landmark type (road, genesis, district).
- Map respective location distance as a ratio to the local maximum distance.
- For instance, in Auction 1, the furthest parcel “distance” to the nearest road was ~60. A parcel with road location “1” is one block from the nearest road, and 1/60th of the maximum distance.
- The higher the ratio, the further away from the landmark.
- Calculate the median and average $USD contributed over the location parameter metadata, on log scale.
If proximity to landmarks was considered a driving factor, we would expect to see higher price paid for closer proximity. In other words, the higher the ratio, the less median or average $USD paid. We would expect a decreasing function to see a positive relationship between price paid for proximity. From Auction 1, we can eye-ball the linear trendlines for higher signal.
[0B] — Auction 2
If we were to run the same analysis for Auction 2, there is almost no relation between the location and price for all three landmarks. Yet, we see that the prices paid in Auction 2 versus Auction 1 are consistently higher for all location parameters across the landmarks. One reason could be the perceived scarcity of $LAND assets; another reason could be the project’s timing and execution risk priced into the assets (a full year of development and market activity).
 Marketplace Pricing of Location & Scarcity
While most of auctioned parcels (~90%) have not touched the marketplace, we can look at the marketplace to observe emergent behavior of the property assets values. Specifically, the buyer’s behavior might inform an assumption of his/her’s expectation of land value features.
We can cut this metadata in two ways:
- Filter traded parcels by # of times traded on the marketplace (turnover).
- Filter parcels by the price multiple relative to its auction price to infer perceived market value.
One take-away from observing the turnover behavior is that $LAND parcels purchased on the secondary marketplace tended to be clustered. We also observe that parcels that were traded with high turnover often were within these cluster proximities.
[1B]: Pricing Multiples
From the pricing filter, we can observe that the highest priced multiples (10x and above auction price) belonged to parcels that had relatively low turnover. This could imply that whales (or $LAND lords) perceived these parcels to be underpriced and followed a uniform pricing to inform their bids.
If we overlay the Decentraland atlas, we begin to see that the clusters form near the edges of landmarks. This might belie the purchaser’s expectation, from a UX perspective, that a user might begin by exploring the landmarks, and then venture into adjacent $LAND neighborhoods/parcels.
 Estate Pricing of Location & Scarcity
Estates refer to $LAND parcels that are adjacent to each other and aggregated as a single collection. The idea is that owning or building on an estate is like owning a small neighborhood — allowing the ability to create city-like experiences. Not surprisingly, the value of estates exhibit a positive linear relationship to its size.
What about the marginal value of additional $LAND to an estate? Not so much…
- Estate Price: Filter estates by size and calculate average price per parcel.
- Base Price: Calculate the price of those individual parcels as the maximum of either the primary auction value or secondary market value.
- Calculate the median of the premiums.
[2A]: $LAND Flipping
One early hypothesis before the analysis was that buyers would purchase adjacent $LAND parcels, aggregate them into estates, and then sell the estate. Interestingly, the data below shows that this behavior is true for market participants in the auction. We see that most estates sold were not comprised of parcels that were bought on the marketplace, implying that buyers bought these parcels $LAND originally in the primary, then flipped them as estates once the feature became available.
Although only a few estates are comprised of $LAND assets purchased on the secondary markets, Section [1B] may hint that buyers have formed estates that have not been sold in the secondary markets yet. It could be that these estate owners are waiting for the market to react to actual construction and building of these interactive environments before selling the $LAND estates.
[2B]: Estate Free Riding
In the estate diagrams, we see that there are many instances of individual parcels bought adjacent to estates. Although a more rigorous timeline analysis is required to dive deeper, it is likely valuable to own $LAND next to an estate, similar to the logic of sitting adjacent to a landmark.
The market behavior shown in this analysis assumes some expectation from the $LAND owners about the future usage and utility of their parcels (similar to many public token projects). The uniqueness of the Decentraland analysis is the attempt to understand NFT feature-specific variables that might drive different valuation characteristics from other fungible crypto assets. At a high-level these features boil down to proximity and size.
Decentraland is meant to be an interactive experience. With the builder tools imminent to launch, it will be interesting to track how $LAND owners will actually make their assets productive (building, leasing, buying adjacent, selling).We may see over time whether these land owners used their land productively or simply waited for favorable speculation. The findings could inform whether the distribution of $LAND via auction went to those who could most efficiently make use of the land (and thus bring utility and value to Decentraland), rather than rent-seekers, speculators or wealth-parkers.
As in most crypto use-cases, while enforceability of scarcity is strongly guaranteed, the parameters of scarcity are not perpetually fixed. In the case of $LAND, unlike real world estates, virtual world scarcity is not bounded by physics. Decentraland is an attempt to iterate on this idea. This may change over time via the usage of $MANA (largely ignored in this analysis) as a governance token for the Decentraland economy, which may eventually be used to vote on proposals related to scarcity and utility such as increasing the size of the map or the dimensions of parcels (re: the conundrum of governance…)
In virtual worlds we are collectively building an entertainment society in a vacuum minus the long-standing social and economic driving forces that create environments like NYC. Yet, we are all participating in the generation-long experimental phase of new incentives and environments, and so though Decentraland will take time to build as its own, we can at least track the utility in real-time. How long until my Decentraland estate gets gentrified?
All data was sourced via the $LAND smart contracts and nonfungible.com on 2019–02–28.
Algorand: The Dark Horse of Crypto World
Ethereum continues to be the de facto choice for most crypto projects. However, its scalability limitation and overcrowding have forced many crypto projects, especially the DeFi ones, to seek other alternatives. Though there are several capable and attractive blockchain solutions available, Algorand has rather quickly grabbed many projects’ attention. Besides new projects opting for the ecosystem, older ones included Algorand realizing its potential. And Algorand is proving them right with regular essential feature updates.
The Underlying Technology of Algorand
Algorand employs the Pure Proof-of-Stake (PPoS) consensus mechanism, which is stake-independent, assuring equal selection chance. The block producers and validators are selected through lucky draws that ensure their identities stay hidden.
Algorand uniquely tuned with the following features –
- High Speed & Throughput – The near-instant lottery, coupled with a block production completion rate of about 4 seconds, enables the mainnet to deliver an over 1000 TPS throughput.
- Highly Scalable – Being totally independent of each other, multiple lucky draws are processed simultaneously. This grants a linearly scalable network.
- Security – The complete random selection ensures all data remains tamperproof. The stake size-independent nature prevents lottery manipulation.
- Proper Decentralization – The random selection of nodes and block contributors guarantees a high degree of decentralization.
- No-fork Policy – In the Algorand blockchain, a block once attached to the chain cannot be altered in the future, promising no future forking.
- Enterprise-grade Solution – Algorand is developed with DeFi in mind, and thus, naturally, the entire ecosystem is built to benefit big organizations in every way.
Algorand’s Important Feature Set
Just like other next-gen blockchain platforms, Algorand 2.0 has adopted a layer-1 focused service implementation policy. But the challenge here is optimizing all those services without sacrificing the speed and scalability Algorand promotes. However, subsequent feature addition on layer-1 showed the Algorand team’s expertise in finding innovative solutions to these complex problems.
The following three features helped Algorand bag some of its best, most important, and influential projects.
#1. Algorand Standard Assets (ASAs)
Introducing the standardization method enables the tokenization and issuance of any asset types on the platform. ASA supports the following token types –
- Fungible assets – Cryptocurrencies, stablecoins, and utility tokens
- Non-fungible assets – Gold, a digital collectible, a single piece of jewelry
- Restricted fungible assets – Security tokens, securities
- Restricted non-fungible assets – Licenses, certifications
#2. Atomic Transactions
Atomic Transfers groups together fungible tokens of multiple parties and process them simultaneously, thus offering a fast, low cost, and secure solution. This benefits various daily trade activities such as –
- Operate trades without trusted intermediaries in DEX
- Simultaneous multi-party payments
- Group payments facility where payments get approved only when everyone pays
#3. Algorand’s Smart Contracts (ASC1s)
Algorand first added stateless smart contact and then went on to add stateful versions, both on layer-1. For comparison, Ethereum offers just stateful smart contracts.
Stateless smart contracts bring efficiency and faster solution to the table as instructions/conditions are provided within each transaction itself. In Algorand’s version of stateful contracts, state data is supplied not with the transaction but with creator/user accounts. This method also offers concurrency and efficiency at a low cost. With both versions, Algorand presents the options of customizability and speedy solution.
Algorand uses a language called TEAL for writing smart contracts. With the introduction of PyTEAL support to both smart contracts, developers would easily write contracts in familiar Python code while it gets translated automatically into TEAL.
#4. Fast Catchup
This feature enables developers to begin working on their DApps without waiting for the entire blockchain to sync. This syncing process can take hours or even days, depending on the size. Developers can download either the entire blockchain or from a particular block where the previous blocks are hashed.
Rekeying allows users to change the security or authorized spending anytime while keeping a single long-running public address. This also enables changing it from a single key to a multi-signatory key to a stateless smart contract with a built-in spending policy.
- This benefits digital asset custodians where, for example, they can have a wallet of multiple private keys with different spending limits.
- Automate crypto inheritance, which will be further enriched when Algorand introduces outside oracles
- Allow you to give account access to other in a trustless manner while retaining the control
Within just two years, Algorand has garnered over 34 partnerships with many of them being important DeFi projects. This shows Algorand’s effectiveness.
- Tether – With the launch of USDT, the leading stablecoin by market cap, on the Algorand blockchain, Tether became the first stablecoin firm to partner with Algorand.
- Circle – Following Tether’s footstep, Circle entered into a partnership with Algorand for its USDC, the fastest-growing and number two stablecoin.
- International Blockchain Monetary Reserve (IBMR) – IBMR.io selected the Algorand platform to launch the Southeast Asia Microfinance Platform (ARC.one) and create ARCC stablecoin on Algorand. Their focus is to support the financial inclusion of the urban-class poor in Southeast Asia.
- SFB Technologies – The firm tasked with developing Marshall Islands’ Central Bank Digital Currency (CBDC) Marshallese Sovereign (SOV), narrowed down Algorand as the underlying blockchain infrastructure.
- IDEX – IDEX partnered with Algorand to offer its next-gen solutions and cash on ALgorand’s growing popularity.
- Verady – With this collaboration, Algorand benefits from crypto tax and accounting software firm Verady’s Ledgible platform for internal accounting and auditing.
- AssetBlock: The real estate startup project selected Algorand to launch its tokenized property investment service
- Meld – This collaboration project uses Algorand’s ASA to tokenize the Australian gold reserve, issue stablecoin, and track it across the supply chain.
- Stonize – It has launched its secure, decentralized, and customized digital security services on the Algorand blockchain.
- FIDE – FIDE online, the digital wing of World chess (FIDE), has selected the Algorand blockchain to store all online official tournament data and player rankings there.
- PlanetWatch – The first “CERN Spin-off-labeled” organization is set to develop the world’s first immutable air quality ledger on the Algorand blockchain incorporating IoT technologies to monitor the environments.
Algorand is feature-rich and its approach to offer a complete solution for enterprises is proving its mettle. Though starting as a dark horse, it is coming out to be a major player, especially in the DeFi space, going toe-to-toe with Ethereum. Don’t get surprised if Algorand becomes the dominant DeFi platform in the near future.
Crypto Market Cap Gained $10 Billion, Bitcoin Eyes $11,000? (Saturday’s Market Watch)
The cryptocurrency market continues to rebound and has added another $10 billion to its market cap since yesterday. Bitcoin trades around $10,700, while some leading altcoins mark serious gains.
Bitcoin Price Trades Around $10,700
Following yesterday’s increase in which Bitcoin topped at $10,800, the primary cryptocurrency retraced to its intraday bottom at about $10,550. However, the bulls intercepted the price dip and drove the asset upwards once again. Just as 2020 goes so far, this Bitcoin spike followed the 1-2% gains seen on Wall Street at the Friday trading session.
The S&P 500 (1.6%), the Dow Jones Industrial Average (1.34%), and the Nasdaq Composite (2.26%) were all deep in the green.
At the time of this writing, BTC has dipped to $10,760 after getting rejected at the first major resistance at $10,790.
As per the analysis, if BTC price breaks above, it could head towards the next resistance at $11,000, followed by $11,200, $11,360, and $11,530. Alternatively, should the asset fall, it could rely on the support levels at $10,580, $10,440, and $10,390, if necessary.
Despite stocks and cryptocurrencies, gold had failed to increase: Recording an intraday high of $1,875, the precious metal dived and closed the session at $1,860.
Altcoins Gain Traction
Some alternative coins lost significant chunks of value lately, but they have been recovering in the past few days. Ethereum has continued its upward movement with another 3% increase to above $350.
Ripple has surged by 5% to $0.243. Bitcoin Cash (1%), Polkadot (3%), Binance Coin (1%), and Litecoin (3%) are also in the green from the top 10. However, Chainlink has outperformed them all by marking an 11% increase. LINK has overtaken BNB and DOT and currently occupies the 6th spot.
As it typically happens, the most volatile price moves come from mid and low-cap alts.
CyberVein leads with a 21% surge. Ren (20.5%), Yearn.Finance (17%), The Midas Touch Gold (14%), DFI.Money (14%), Cardano (11%), Zilliqa (11%), HedgeTrade (10.5%), and Nervos Network (10%) follow.
In total, the cryptocurrency market cap has increased by $10 billion since yesterday. On a 48-hour scale, the metric is up by 8% since its bottom at $319 billion to $344 billion.
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Bitcoin Always Online In Venezuela: Launched The First Satellite Node In Collaboration With Blockstream
Bitcoiners in Venezuela don’t need the internet to send some Satoshis. Today, the crypto payments startup Cryptobuyer announced the successful launch of the first Bitcoin satellite node thanks to a collaboration between Cryptobuyer, Blockstream, and a team led by a crypto enthusiast named Aníbal Garrido.
The initiative allows interacting with the Bitcoin blockchain without the need of an internet connection. A satellite antenna installed in Venezuela is in charge of the communication between the node and the blockchain.
We successfully installed and run a satellite #Bitcoin node in #Venezuela which allows us to be independent of the internet to download messages and validate transactions. Thanks to @Blockstream @adam3us @richardbensberg @anibalcripto for all your support https://t.co/TUb6eG19XP
— Cryptobuyer (@cryptobuyer) September 25, 2020
How the Satellite Node Works
This novel solution allows the Venezuelan node to process information in real-time completely off-line. Thus, the normal functioning of the network in case of connectivity failure (something widespread in the country) is guaranteed. It also facilitates the use of cryptocurrencies in remote places where internet service is scarce, expensive, or even non-existent.
The project works as follows: Blockstream contracts a number of satellites to provide the communication service between the nodes and the blockchain. Cryptobuyer bought the necessary equipment to receive the signal and connect to the satellite, and Anibal Garrido and his team were in charge of assembling the antennas and making the required adjustments.
It’s been a pleasure working with @cryptobuyer and @anibalcripto to launch the first of many #BlockstreamSatellite nodes in #Venezuela, ensuring bitcoiners in the region are always connected to the Bitcoin network! 🛰⛓💻 https://t.co/hzqoR1nACI
— Blockstream (@Blockstream) September 25, 2020
For Alvaro Perez, a software programmer from Valencia City who helped set up the whole infrastructure, the node’s synchronization was an inspiring moment. In statements compiled by Cryptobuyer on an official blog post, the expert says that the operation was a “great achievement.”
“We downloaded the whole Bitcoin blockchain and successfully carried out the first transaction through a Bitcoin satellite node in our country on September 23, from the city of Valencia (…) We received bitcoin through the satellite connection without any internet connection. It was a moment of great achievement.”
The journey is just beginning for Bitcoiners in Venezuela
This would be the first of three antennas that Cryptobuyer plans to deploy to cover the country’s most critical areas. The remaining two will be placed in the country’s capital, Caracas, in the north of Venezuela, and Puerto Ordaz, an industrial city located south of the country.
Later on, they plan to deploy a large number of small devices that will serve as a sort of repeater antenna to create a sizeable mesh-type network that will facilitate transactions in Bitcoin even far away from the primary antenna.
Now there’s no excuse to start using some satoshis in the country. Venezuela keeps proving that it has plenty of reasons to be on the podium of the three countries with the most adoption of Bitcoin around the world.
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