Analysts at cryptocurrency hedge fund Pantera Capital are citing two altcoin projects that are expected to see a bull market.
In their latest Blockchain Letter, Pantera analysts Cosmo Jiang and Erik Lowe said they are looking for cryptocurrency projects that are gaining fundamental traction.
“Tokens with product-market fit, guidance from a strong management team, and an underlying protocol with a path to sustainable unit economics will perform best in the next cycle.”
Analysts first mentioned Stacks (STX), a project that aims to help Bitcoin (BTC) scale and provide smart contract functionality to the leading cryptocurrency by market capitalization.
Analysts say:
“Stacks’ mission to bring innovation to Bitcoin is exciting and timely. Interestingly, at this moment, Stack is also the only real-time generalized smart contract layer 2 in Bitcoin today. This contrasts with the Ethereum ecosystem, which has dozens of layer 2s competing for market share.
There may be multiple viable Bitcoin Layer 2s over time, but given its First Mover market positioning, Stacks believes it has a competitive advantage over any new competitors that emerge for quite some time, and we expect this competition to come. “I expect it.”
Next, Pantera says that the Ethereum (ETH)-based decentralized exchange dYdX (DYDX) is one exchange worth watching given its strong returns and economics.
“One of the key reasons I think dYdX is interesting is that unit economics have changed positively over the last year. The business model is simple. They collect a fee of approximately 2.5 basis points and pay a customer acquisition fee. dYdX earns roughly 1 basis point of return with a healthy 40% margin.
The second reason is that there was a change in capital allocation at the end of last year. dYdX began returning capital to token holders in the form of staking rewards (similar to stock dividends) with its v4 upgrade in December. dYdX protocol revenues are now distributed directly to token holders, accruing token value specifically.”
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