Web3 projects have become very popular. What they raise millions of dollars for in times of crisis, opinion of our Crypto-Upvotes experts

Startups related to metaworlds and WEB3 continue to attract huge funds for their development. What awaits cryptocommunity with arrival of new technologies, and what latest developments of this industry are focused on

Last few weeks bring news about new venture capital funds in cryptocurrency sector. NFT platform Immutable launched a $500 million venture fund, Multicoin Capital is investing $430 million in crypto startups, and Binance has raised more than $500 million to launch its venture fund. While some analysts talk about the onset of crypto winter, WEB3 projects are gaining popularity.

A lot of new projects will use new tokens within their ecosystems. The easiest and most budget-friendly way to provide new tokens with liquidity. This is to create liquidity pools on DeFi platforms paired with existing assets.

This will lead to an increase in DeFi sector funds currently being used in smart contracts on a particular platform or across the market as a whole (total value locked; TVL). The imminent potential increase in TVL due to the arrival of traditional financial products in DeFi has been discussed by many sector analysts in their reviews.

Initial liquidity for new pairs will be provided by funds from developers’ funds. Then, the rest of the users who want the tokens of the new projects will join the liquidity supply. Participation in the new pools will in many cases involve swaps (temporary exchanges) of users’ existing tokens on the platforms in order to obtain tokens of the desired pair. Thus, the emergence of even one new popular pair will inevitably lead to the popularization of other platform pairs as well.

Possible arrival of Killer App

Increased funds for developing new solutions for this sector will lead to an influx of new specialists. Ideas of which may turn out to be breakthrough ones. Despite almost a decade of history. All cryptoprojects have not yet been able to create Killer App, coveted and expected by many. It is an app that would demonstrate the undeniable convenience of new technological solutions for the entire population of world. Which would lead to an acceleration of blockchain expansion.

New venture capitalists rate the emergence of such an app as the most likely to happen in the area of gaming projects. A large number of P2E and x-2-earn developments are among them. X-2-earn involves replacing  “X” in a phrase with any other action in order to obtain rewards. For example, such an action can even be useful to the planet collecting and recycling garbage.

Everyone has been waiting for Killer App since BTC appeared in 2014. A combination of many conditions is necessary for the emergence of Killer App. Thus, the number of attempts to develop different apps is important for the sector. To increase probability of combining all conditions to achieve desired effect.

From histories of companies that develop computer games. We know that despite technical similarities of many products. Only a few of these games became really popular. Their success was due to a combination of many factors necessary for popularity as well as good marketing.

New earning opportunities and popularity of WEB3 projects

The attraction of users to new projects will, to some extent, take place through Giveaways and Airdrop. In this way, users will be able to earn a small amount of money without investing their own money.

Tracking promising projects at an early stage. It helps to notice in time a message about token allocation or NFT. You can get a valuable digital asset for the simplest actions. It is using bridge between networks, swapping on DEX or providing liquidity in a new pair.

The increase in the number of projects under development will also affect the labor market. New projects will be in demand from designers, UI and UX specialists. As well as copywriters, SMM-managers, analysts and developers who will be interested in further development in blockchain technology.

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Why project developers burn millions of dollars worth of their tokens, our Crypto-Upvotes experts explain

Why and how do developers burn their tokens, and what benefit do investors get?

Cryptocurrency burn is an intentional destruction of a certain number of tokens in circulation. Many cryptocurrency projects use this mechanism to regulate issuance. Tokens can be destroyed for several reasons: for example, in order to increase token prices. Burning some coins makes each remaining token more in demand and its price goes up.

Cryptocurrencies are also withdrawn from circulation to prevent inflation and depreciation of assets. With unlimited issuance, the amount of coins is constantly increasing, and each individual token gradually depreciates in price. Then developers conduct incineration to prevent fall of cryptocurrency’s price. Thus, there is always about the same amount of cryptocurrency in circulation. Volumes and frequency of this operation depend on the speed of issuance.

Some projects destroy coins after ICO if not the entire amount of cryptocurrency was sold during campaign. In this case, developers retain price of coins already purchased by investors.

How to burn cryptocurrencies

Commission Burn

Transaction fees are usually sent to miners. But there are cryptocurrency projects in which these funds are burned. To do this, a transaction is conducted in which fees are set at an amount required to be burned. Sent tokens remain in blockchain, and excess funds are “burned” by this system.

Contract algorithm burns tokens

Sometimes developers initially put a Proof-of-Burn algorithm on blockchain. When a transaction takes place, miners send some of coins to a special address that no one else has access to. This transaction is recorded in blockchain, which is proof-of-burn for tokens.

Burning in a dead wallet

A lot of projects use burn through a wallet with no private keys. Amounts that need to be destroyed are sent to it. There is no access to such a wallet. Therefore, any interaction with tokens at such an address is unavailable. Projects openly publish data on such wallets and burn operations.

Consider large Cryptoprojects that burn their tokens

Ethereum

In August 2021, ETH ecosystem updated and changed its fee structure. Transaction fees in a block (for gas) began to be sent partly to network for burning and partly to miners as rewards. Today, major Ethereum “burners” are NFT-marketplace Opensea and crypto-platform Uniswap. Volume of token destruction is about 900,000 ETH per year.

Binance Coin

In 2017, Binance issued 20 million BNB and announced plans to burn tokens quarterly and will do so until half of their tokens are destroyed. From end of 2021, amount of tokens to be burned is calculated automatically and depends on the number of transactions on exchange.

Binance also destroys a portion of the BNB Chain gas fee in real time. Exchange practices burning by transferring money to an address that is not available for use.

Tron

Project developers use the same token destruction method. Total number of TRX tokens burned is approaching 8 billion.

Ripple

Cryptocurrency’s algorithm has had a token burning mechanism from the very beginning. Each transaction destroys 0.00001 XRP. The concept of the project implies a certain number of coins. Which should not increase, which, according to developers’ idea, will allow avoiding inflation. At the same time, this algorithm reduces numbers of spam transactions.

Many different cryptocurrency projects like Shiba Inu, Stellar, BabyDoge, Elastos, Optimism and others are actively practicing coin flaring to attract investors’ attention.

Who benefits from token burning and what investors get from it

By burning coins, developers buy them back with their own money, or somehow sacrifice part of their profits. However, still remaining holders of this cryptocurrency, they are betting that asset will grow in value in future. Coin destruction is done to make cryptoprojects more successful and attract more holders.

Burning tokens can be compared to buying back shares in a normal financial market. Companies buy back their securities in order to reduce their number on market and strengthen their quotes. This strengthens position of shareholders and company.

At the same time, burning coins can strengthen reputation of a crypto project. Destruction of tokens left unsold after the initial offering. Increases the level of trust in developers and contributes to the growth of the token price on the crypto market.

Investors also benefit when a project burns unsold tokens after an ICO. Using this type of tool shows that developers believe in their project and that their cryptocurrency will grow in the long run.

Our Crypto-Upvotes experts believe that burning coins does not guarantee an increase or stabilization of price. If project is not in demand, reducing the number of tokens will not affect its price in any way. Also, one should not rule out effects of general market conditions. In periods of increased uncertainty, destruction of a cryptocurrency may not have desired effect.

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Crypto Market Manipulation: How Whales Make Money from Us – Crypto-Upvotes

Why it’s not a good idea to buy a rapidly growing asset and use highly leveraged debt. And under what conditions do most new users lose money because of Whales

Many cryptocurrency users believe that big investors, known as Whales. They use media hype and technical manipulation of cryptocurrency exchanges for their own profit. It is believed that the income received from such actions, Whales receive at the expense of losses of many smaller investors.

Crypto-Upvotes experts told us what schemes Whales use to manage prices in crypto markets. And how not to fall into a trap prepared by them.

Our experts tell us what manipulation schemes Whales use

Whales use the same schemes to manipulate the price of an asset. As do most famous investment funds or banks on the stock market. In exchange trading and speculation, psychological factors always matter. It is enough to leak FUD about problems of this or that crypto-platform. As their tokens begin to decline in price. Also our Crypto-Upvotes experts give an example of tweets of Elon Musk. After which the value of some “meme” cryptocurrencies quickly rises.

Another popular method of manipulation is through volume sales or purchases of assets. Selling can stimulate a decline in the value of BTC and other coins. Or be a signal that the price will start to fall. A large purchase of an asset by an institutional investor could be the result of insider information. And predict a rapid rise in price of coin.

There are quite a lot of opportunities to manipulate the price. Informedness of exchanges themselves allows Whales to create conditions for short-term price changes. Clients of some exchanges say that after making the first serious profit on margin accounts (futures contracts). They have problems with opening “sell stop” and “buy stop” orders. Which automatically and unnoticeably for trader change to other types of orders. For example when BTC quotes were balancing near $20,000. FTX clients began to complain about the inability to place buy orders below that level. Because their prices “are out of the range calculated by this platform”.

Another way to manipulate without direct sales. Is to create “walls” of buying or selling. By setting high volumes to sell at lower market limits. It forces those who want to sell to lower their prices quickly. After that price falls and the “wall” goes even lower. In fact, Whale is not even directly involved in trades in this scheme. But he provokes other traders to conduct transactions under much worse conditions for themselves.

How not to fall into trap prepared by Whale and not to lose your money

A huge number of bull and bear traps are created specifically to take money from new investors. Therefore, investors without experience are advised to engage in long-term investments.

Therefore, we should not be focused on actions of large investors. You have to follow their actions, but don’t try to repeat all their actions yourself. That way there is less chance that Whales will use you for their own goals. And forcing you to buy or sell something. Make your own decision, not influenced by tweets from Elon Musk.

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