Be greedy when others are fearful, and fearful when others are greedy.
If there is one sentence that encapsulates Warren Buffet’s market thinking, this is it. The Oracle of Omaha is famous for his contrarian investment thesis which has cemented his status as one of history’s greatest managers of money. His method is really simple — where other people see low prices, he sees value.
Value investing, the strategy Buffet has ridden to great success, involves picking assets that are trading for less than their intrinsic value with the expectation that the market will eventually wise up to their true price. During a glittering career that has spanned over six decades, Buffet has time and again proven that buying great assets at good prices is a strategy that yields fruit.
Buffet isn’t a big crypto fan, but that doesn’t mean we can’t find creative ways to apply his investment thinking to digital assets. Specifically now, when asset prices are depressed and a wave of pessimism permeates the altcoin markets, shrewd investors should be on the hunt for quality undervalued projects with significant upside potential.
Valuation models for crypto assets, while having come a long way in such a short span of time, are still relatively immature when compared to the more established equity markets, creating a unique challenge for investors seeking out value opportunities. Nevertheless, sticking to 3 fundamental principles can help us dig for gems amongst the mountains of shitcoins and vaporware.
The 3 criteria for a value investment in crypto are:
- Comparatively Undervalued
- Large Addressable Market
- Proven, Execution-Oriented Project and Team
Powered by a talented team with a demonstrable ability to ship products constantly, the DAPP token seeks to become the access token for a host of crucial services such as storage, compute and data feeds, each of which is a multi-billion dollar market on its own.
At today’s prices, DAPP is THE value play for crypto investors. The project, launched by LiquidApps early this year, is a blockchain-agnostic middleware for a wide range of scaling services already in use by enterprise and consumer applications, making the DAPP token crucial to decentralized applications evolving from an idea into tangible products with real end-user utility.
On the other hand, the DAPP Network had a working product — vRAM — ready to go on day one. Holders of DAPP could utilize the token for its intended purpose of accessing services from the beginning of the sale.
If there is one statistic that captures the irrational pessimism in altcoin markets today it’s this: While only $2.8 million worth of DAPP tokens have been sold despite the network being live since launch, Block.one had raised $700 million at this stage with nothing more than a whitepaper.
At the time of writing, 306 million DAPP tokens had been distributed via the DAPP auction of which 89% are staked to DSPs. Clearly, there is a serious discrepancy between utility demand for DAPP (which is used to access services through staking) and demand for DAPP as an investment asset.
Markets tend to rationality so don’t expect this to hold for very long.
Large Addressable Market
Everyone thinks of Amazon as an e-commerce giant.
That they are, but the Seattle-bases behemoth does so much more than sell stuff online. A majority of Amazon’s revenue comes from their AWS business, which pioneered the cloud computing industry responsible for bringing the internet to the scalable technology it is today. Microsoft, Google and others have since joined the cloud party with their own proprietary offerings. Public cloud providers give developers access to storage, computing power and a range of other essential services for scaling their applications.
Instead of a single corporation controlling vast computing resources and selling them to consumers, the DAPP Network is a decentralized marketplace for services which anyone can join as a DAPP Service Provider (DSPs.) DSPs are already providing storage, account creation and web oracle services with many more powerful implementations on the way. There’s LiquidLink for trustless cross-chain communication, LiquidOracles for accessing external data from within smart contracts and LiquidAccounts for free account creation. Key to accessing all these services is the DAPP token.
Clearly, this project is tackling a problem of significant scope. As we shift towards a decentralized internet, we’ll see the DAPP Network stealing market share from traditional cloud players.
Proven, Execution-Oriented Project and Team
The crypto market is littered with highly-valued projects still in the ‘potential’ phase.
Cardano is valued at over $1 billion despite having 0 applications running on its platform. Ditto for Cosmos which is worth $620 million. Omisego is worth $165 million and they don’t even have a mainnet.
In contrast, the DAPP Network is valued in the $10 million region despite the fact that its vRAM service is already in production use by a mass scale application. Moonlighting, a freelancing platform with 750,000 users, recently onboarded its entire userbase onto the EOS mainnet at a bare minimum extra cost.
As Raman Blindish, CEO of Investing with A Difference whose company consulted on Moonlighting’s blockchain migrations — “We are doing 10,000–20,000 transactions per day and CPU/NET cost on EOS blockchain is almost minimal. So, using LiquidApps framework for RAM, we brought down the cost of each transaction to less than $0.0005 on average.”
vRAM was first, but powerful services are constantly being pumped out by the exceptionally talented team led by CEO Beni Hakak and CTO Tal Muskal. What sets Beni, Tal and their team apart is that, unlike most of the market, their primary focus is on constantly shipping high-quality products. While other teams choose to stay purely in the realms of theory and research, the LiquidApps team prioritizes active development and real utility.
Guys remember any investment you make carries the risk that you’ll lose your principle, especially in crypto. Markets can stay irrational longer than you can stay solvent, so invest carefully.