During our recent AMA, we promised to announce our plan for the token swap. We thought long and hard to carefully consider all the implications that the token swap can bring to the company. Throughout this process, we took special note of the current market conditions and how we should position ourselves to become one of the top players in the budding DeFi industry. Ultimately, we wanted to make a decision that would benefit both the company and our investors who have been faithfully supporting EdenChain. After much deliberation, we concluded that it is best to postpone the token swap. We would like to share our thoughts behind that decision in this post.
What is the key to becoming the leader of the De-Fi industry? MoA must be instantly integrable for existing de-fi protocols to provide effortless service to investors.
For a project to succeed its scalability is something one cannot emphasize enough. At EdenChain, we design our services and their business models to be optimized for easy integration to achieve high scalability. At the moment, we are developing an AI-based model that will be the center of all the services we will offer in the future. Once we demonstrate the performance of the model with our proprietary fund, we will be able to expand our DeFi products and services by doing the following:
Firstly, MoA will be able to operate in a manner similar to banks by offering investors fixed annual returns. Given the current low-interest rate that ranges from 1.25% to 1.75%, we expect to be able to offer a much more competitive rate when considering the huge compounded annual growth rate (CAGR) of the blockchain industry, combined with our expertise in building AI models for algorithmic trading strategies.
Secondly, we can modify MoA’s Crypto Index Funds into ETFs and invite a greater pool of investors to join. During the initial phase, our main focus will be to collect data to prove the performance of our model. As such, we will be on the conservative side regarding the pool of investors participating in the index funds. However, once we collect enough data that validates the performance of our index model, we can open the investment opportunity to the public by making the funds easy to buy and sell. By definition, that is exactly what an ETF is – an index fund modified for easy trading.
Thirdly, we will be able to offer leverage for other DeFi services. For instance, if you have $1,000 invested in MoA, you can use the capital as collateral to take a loan for a percentage of the total amount. Then, you can re-invest the loan into other promising DeFi products.
In traditional finance, 6 months to 1 year is often considered the customary time frame to test and prove the performance of a new index. We are going to apply the same length of time to validate the efficacy of our index. After this testing period, we expect MoA to make rapid and diverse expansion, thanks to the wide range of DeFi protocols, such as MakerDAO, Compound, Dharma, dYdX, and Synthetix that are already existing within the Ethereum network due to the recent boom in the industry. We believe that easy integration to these protocols will offer us a huge advantage in terms of saving time and resources for both horizontal and vertical expansion of our services. Therefore, having our token integrated with these protocols is imperative, and we achieve that by remaining an ERC-20 token. If we were to switch the current ERC- 20 token to our native token, EdenChain would either have to independently develop services provided these protocols, or build a sort of compatibility device as they are necessary to expand our services.
There is a considerable network effect to be gained by remaining on the Ethereum Network.
Having remained in the Ethereum network is expected to bring EdenChain another huge benefit, and that is the famous Network Effect.
Simply speaking, the network effect refers to a phenomenon whereby increased numbers of people or participants improve the value of a good or service (Investopedia).
People often use the internet as a prime example when demonstrating the network effect. When one person is using the internet, the technology does not provide a substantial benefit to the owner at all. When there are two people in the network, it is better than the first, but not by a lot. However, as the number of participants increases, its value grows exponentially. Today, we cannot imagine our society without the internet. Applying the same principles, the network effect within the DeFi industry will only grow bigger, especially considering that the industry is only at its nascent period with huge potential for growth. To get the maximum benefit of the network effect, MoA must stay integrative, and remain as accessible for other DeFi enterprises as possible. The benefit of time we save in launching our service and forging meaningful partnerships in this early period will be particularly substantial when we manage to become the first mover and the network provider of the industry we are tapping into.
On that note, let’s discuss the current market condition and the best position EdenChain can take in this stage.
First mover advantage in a rapidly growing market.
The recent boom of crypto credit was quite spectacular. Starting in 2018, the market grew from $0 to $3 billion USD in just under two years. What does that mean? Many believe that this reflects the growing desires of investors to better manage their crypto portfolio.
When a new asset arrives on the market, it creates a pattern within its investors. First, people create accounts to study the asset. Some gather, some trade, and some leave the market. Once the asset grows in value and catches more popularity, the next phase arrives where investors spend more capital to accumulate the asset in quantity. Third, once investors have gathered enough assets they now desire to manage their portfolio to accrue a more steady stream of income from the assets.
The recent growth of the borrowing and lending business in the crypto market was made possible as the timing coincided with the growing desire within the greater crypto investors for better portfolio management. Given this explosive level of growth, one can only imagine how much the market will grow over the next 2-5 years.
We can gauge the size of the potential market for portfolio management by benchmarking the traditional financial industry. In legacy finance, portfolio management takes up about 30% of the total market share. When you apply that proportion to the current blockchain market size, it represents a roughly 65 BN USD market. What is more significant is that research institutes expect the value of crypto technology and companies to grow to 3,678 M USD by 2025 with a 32.35% annual growth rate. That is a huge open market to seize for anyone with superb technology and services.
On that note, let’s talk about the timing. As with all industries, it is much better to become the network provider than to be part of the network. To become a network provider, there is no greater advantage than becoming the first mover of the industry. When you are the network provider, there are opportunities for you to shape the landscape and set the market standards. If you miss the time and arrive late, then you are often subjugated to the established system and pay a premium to these earlier settlers. For these reasons, becoming the network provider plays a pivotal role in deciding who becomes the next industry’s leader. While the crypto credit market is pioneered by other companies, we believe that we still have a fair chance of becoming the industry’s pioneer and the leader in the realm of passive crypto portfolio management. That is one of the main reasons why EdenChain wants to focus all our resources on our DeFi solution. We believe that by presenting a superb index model that is easily integrated into other DeFi solutions, we can catch both rabbits of gaining the network effect as well as being the network itself.
The changing atmosphere and the next step
The recent political movement suggests that there is no better time to focus all our resources into DeFi than now. In addition to the aforementioned reasons such as network effects and first-mover advantage, the Korean National Assembly passed an amendment on March 5th, 2020 that will officially bring cryptocurrencies under South Korea’s legal system. One of the main improvements it will bring on the business front is that EdenChain will be able to accept fiat starting from March 2021. That will open up the floodgate of the market that was previously closed to EdenChain. Adding to this, the banks are offering very low-interest rates. As the interest rates cannot make up for the inflation rates, people are actively seeking alternative methods to invest their funds to plan for their future. If our model offers investors a significantly higher rate of annualized returns than the traditional banks do, we believe that our solution will receive a lot of positive attention. When that movement is empowered by the opening of the fiat market, we envision a very positive outcome that will lead to significant business expansion across diverse financial instruments.
We thought long and hard to make the decision that it is in the best interests of the Eden community members, especially those who have been faithfully stood by us. We concluded that the best answer is for EdenChain to achieve this new business goal. Regarding the token swap, we have spoken to exchanges and they have confirmed to us multiple times that there is no logistical problem in moving forward with the swap procedure at any moment. Again, EdenChain believes that we are obligated to make the decision that would bring the company and thereby our investors the best results. We decided, therefore, to postpone the token swap to sometime in 2021 to gain time for MoA’s DeFi service to launch, to prove its performance, and to forge a meaningful network with other DeFi enterprises.
Roadmap for MoA's De-Fi service
The year 2020 will be a formative year for MoA to become the leader of the De-Fi industry.
In Q2, we are going to start operating the MoA proprietary fund. The AUM of the fund will begin at around 100K USD. The performance of the fund will be recorded at a regular interval on our MainNet.
The Q3 will be devoted mainly to the fine-tuning of our index model and demonstrating its performance. Once we collect enough data to validate our model, we will then start the MoA ETFs.
As it takes at least 6 month-worth of data to validate the performance of an index, we expect the launching of the MoA ETF to be somewhere around late Q4 or early 2021 Q1. At that point, we will only accept EDN as the mode of investment for buying and selling of the MoA ETFs.
Frequently Asked Questions
We understand that you may still have questions, so here are the answers to the frequently asked questions relating to the new direction.
Is the MainNet stable?
It is absolutely stable. You can always verify its status by checking T-Explorer. While the volume is low, the blocks are steadily growing.
What is going to happen with business partnerships with enterprises?
We are going to form new partnerships with DeFi enterprises. There will be more services similar to ours as the market grows in size. Then, we can list their index, index fund, and ETF on MoA, as we list ours on their platforms. There are huge opportunities as long as we stay integrated with other Ethereum-based DeFi protocols.
Will there be an update regarding the Masternode Program?
Yes. As the business models are having an overhaul, we will update the Masternode Program accordingly so that it will be aligned with the new direction and to ensure node holders receive adequate revenue.