What if You Could Invest in the Entire Cryptocurrency Market with One Token?
So much in the news about the meteoric rise of Bitcoin. From institutional investments, Square’s $50 million, Microstrategy CEO Michael Saylor’s vow to hold Bitcoin for 100 years, and even PayPal announcing their decision to sell, accept and carry BTC along with ETH, BCH, and LTC.
Bitcoin rose 42% in just this last quarter of 2020.
And these investments have already proven themselves. Square’s $50 million produced a return of $18 million, while MicroStrategy made to date a $133 million profit on its Bitcoin investment. Though crypto opportunities are not yet available on PayPal, its worldwide ecosystem includes 346 million open accounts with more than 26 million merchants. The potential is staggering.
So the FOMO is kicking in...
Impressive, but what about the rest of the vast cryptocurrency market? The overall crypto-asset market cap has skyrocketed from $191 billion in January 2020 to over $440 billion at the time of this writing. With BTC claiming $270 billion, more than half, but where is the rest going?
For some savvy (or sometimes just lucky) investors, the wide world of “Altcoins” (anything other than Bitcoin) has been very profitable. For instance, the most well-known oracle token, Chainlink (LINK), rose from about $2 in January 2020 up to almost $20 in August 2020 for a 1,000% return. In fact, gains of 9000% just clocked in this past week for Electronero (ETNX).
On the other hand, wild losses are also still possible, such as the recent drop of 92.97% of value in just one week for the DeFi Insurance Protocol (DFIP) down to $.000009. Daytrading cryptocurrencies can be a full-time job of analysis, research, and sometimes fervent prayer. Most investors seek stability over the outrageous rollercoaster of fast and furious crypto day trading in these times of financial uncertainty.
Financial instruments have been developed in the stock market to gain a financial safe-haven with moderate gains. The most notable one is the ETF (exchange-traded fund), a security holding multiple underlying assets, to track an index trade, including other stocks, commodities, or bonds. These ETFs are available to be traded as ordinary stocks but have the benefit of lower expense ratios and fewer broker commissions than buying the individual stocks. Another advantage of holding an ETF over investing in individual stocks of a specific type is the reduced volatility and risk from exposure to many stocks within a single ETF.
This concept applied to the total cryptocurrency market of over 5,000 various coins/tokens is exciting. How could holding a single token that tracks the entire $400 billion cryptocurrency market benefit the investor?
Enter the BASE Protocol. The BASE is a synthetic token whose price is pegged to all cryptocurrencies’ total market cap at a ratio of 1:1 trillion. This single token enables traders to speculate on the entire crypto industry. Base Protocol (BASE) is a token whose price is pegged to all cryptocurrencies’ total market cap at a ratio of 1:1 trillion. So if the crypto market cap is $350 billion, a BASE token is $.35. If the crypto market cap is $700 billion, it is $.70.
BASE’s peg to the total cryptocurrency market cap (CMC) is maintained by an elastic supply protocol called “rebasing.” The BASE supply programmatically expands or contracts the total token supply to match the target price of one-trillionth of all cryptocurrencies’ total market capitalization.
This stabilizing function of rebasing might be understood best as parallel to a stock split. This occurs when a company divides the existing shares of stock into multiple new shares. It is used after a substantial rise in the stock’s value to create more shares at a lower price, thereby increasing liquidity. The number of shares increases by a specific multiple -- most common ratios being 2-for-1 or 3-for-1, meaning the stockholder will have two or three shares for every share held before the split -- the total dollar value of the shares is the same compared to pre-split value. Similarly, the number of BASE tokens expands or contracts to maintain equilibrium with the entire cryptocurrency market’s total market cap.
An investor is holding 1 BASE priced at $1 to reflect the current crypto market cap of $1 trillion. The crypto market cap doubles to $2 trillion. The investor’s BASE also doubles in value with this disruption and is worth $2. Through rebasing, the investor’s single BASE token becomes two tokens worth $1 each, maintaining the liquidity and desired price point by increasing the supply of tokens.
The BASE Protocol acts as a one-stop trading instrument allowing investors to speculate on the entire crypto industry at once. The advantages of using the BASE for outsiders interested in crypto investing and seasoned traders will vary, and new possibilities, for instance, in DeFi, will emerge. The BASE Protocol and token will even prove useful for institutional investors seeking to diversify crypto exposure to the entire industry, as well as retail crypto investors looking to hedge or diversify.
We will keep an eye on this fascinating new BASE Protocol and token and report back to you with developments. Join us in our journey at Beyond Enterprizes as we explore new frontiers in finance.
